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HP (NYSE:HPQ) eased market worries over PCs and printing with solid Q3 results, prompting JPMorgan's Samik Chatterjee to reaffirm an Overweight rating and lift his price target to $30 on AI PC momentum, a Windows 11 refresh, and supply chain gains.
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Chatterjee reaffirmed confidence in HP, raising the December 2026 price forecast, citing reduced downside risks to fiscal 2025 estimates. He said HP's fiscal third-quarter results eased investor concerns about a potential PC market slowdown and margin pressure in printing, as the company delivered substantial revenue and kept its full-year outlook intact despite headwinds.
Chatterjee noted that AI PC adoption already makes up 25% of HP's mix across consumer and enterprise segments, helping to drive refresh momentum alongside the Windows 11 upgrade cycle.
He added that HP expanded Personal Systems (PS) margins sequentially through pricing and supply chain diversification away from China, with further margin gains expected in fiscal fourth-quarter.
HP also maintained Print margins at 17.3%, within its long-term target range, and guided for margins at the upper end of that range next quarter, despite ongoing competitive and tariff pressures.
For third-quarter, revenue totaled $13.9 billion, in line with JPMorgan's estimate and above consensus, with PS revenue of $9.9 billion and Print revenue of $4.0 billion. EPS came in at $0.75, matching expectations. HP guided fourth-quarter EPS between $0.87 and $0.97, with JPMorgan's forecast at $0.91. The company also reiterated free cash flow guidance of $2.6–$3.0 billion for fiscal 2025.
Looking ahead, Chatterjee expects mid-single-digit PC market growth in the second half of fiscal 2025 and continued AI PC momentum into 2026. He projected a structural low-single-digit decline in the print market through 2026. HP's strategic execution, cost optimization, and diversified supply chain are mitigating factors, he says.
Price Action: HPQ stock is up 2.64% at $27.83 at last check on Thursday.
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Posted In: HPQ
