2023-08-28 14:26:28 ET
HP Inc ( NYSE: HPQ ) is expected to post over 8% decline in third-quarter revenue on Tuesday, as cautious consumers and corporate clients delay orders for electronic items amid a slow economy.
Wall Street expects the PC maker to post Earnings Per Share (EPS) of $0.86, with investors keenly focusing on outlook and HP’s comments regarding PC market trends for the second half of the year.
Third-quarter revenue is expected to be $13.40 billion, its sequential decline for the fifth straight quarters.
After seeing surge in demand for PC sales and other electronic devices due to pandemic-driven work-from-home trend, companies such as HP and Lenovo are now reeling from a slow PC market recovery in the recent quarters.
According to data from research firm IDC, global PC shipments in the second quarter dropped 13.4% Y/Y, marking the sixth consecutive quarter of contraction amid macroeconomic headwinds, weak demand, and a shift in IT budget spending.
Sales for HP’s Personal Systems segment, which offers commercial and consumer desktop and notebook PCs, dropped 29% during the second quarter, with the company warning that the macro environment will remain challenged during Q3. Second quarter sales for its printing segment also fell 5%.
However, some analysts are optimistic about the PC market recovery and said this “could surprise the market positively in the near-to-medium term.”
Morgan Stanley analyst Erik Woodring said it looks as if the PC industry is starting to rebound, after the post COVID lull.
Over the last two years, California-based HP has beaten EPS estimates 75% of the time and has beaten revenue estimates 38% of the time.
Seeking Alpha analysts, Wall Street and Seeking Alpha’s Quant ratings all consider the stock a “hold”.
HP, which has a market value of over $30 billion, has gained over 17% so far this year.
Over the last three months, EPS estimates have seen six upward revisions as well as six downward revisions. Revenue estimates have seen two upward revisions, compared to eight downward moves.
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HP earnings look-ahead: Focus on PC market recovery; Q3 revenue set to decline