HP (HPQ) stock is soaring Thursday after the PC and printer company beat revenue and earnings expectations for its fiscal second quarter and issued solid guidance for its fiscal third quarter.
In the three months ended April 30, HP said its revenue slipped 0.8% year-over-year to $12.8 billion, pressured by an 8% drop in printing net revenue. Still, HPQ saw revenue in its personal systems segment, its biggest contribution to total revenue, rise 3% from the year prior to $8.4 billion.
The company also said earnings per share (EPS) were up 3.8% from the year-ago period, to 82 cents.
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"We delivered a solid quarter and first half, and unveiled an innovative portfolio of solutions designed for the AI [artificial intelligence] and hybrid era," HP President and CEO Enrique Lores said in a statement. "We have a clear strategy and are well positioned to drive profitable growth across our business."
The results beat analysts' expectations. According to CNBC, Wall Street was anticipating revenue of $12.6 billion and earnings of 81 cents per share.
For HPQ's fiscal third quarter and full year, the company expects earnings per share to arrive in the range of 78 cents to 92 cents and $3.30 to $3.60, respectively. HPQ had previously provided a range for earnings of $3.25 to $3.65 per share for the full year.
HP's outlook satisfies analysts' expectations, which called for earnings of 85 cents per share in the fiscal third quarter and $3.43 per share for the full year, according to Yahoo Finance.
Is HPQ stock a buy, sell or hold?
The tech stock has posted a strong performance so far in 2024, rising about 24% for the year to date as of this writing. Still, UBS Global Research analyst David Vogt maintained a Neutral (Hold) rating on HPQ after earnings.
"While the results were slightly better than expectations, we think that the tempered outlook for the remainder of HP's fiscal year makes sense given the soft yen dynamic and a recovery in PC taking longer than expected, especially as the market awaits wider availability of AI PCs," Vogt wrote in a note to clients.
Still, the analyst thinks these headwinds will start to recede at the start of HPQ's upcoming fiscal year "as AI PCs begin to ramp during the holiday season, the Windows refresh cycle accelerates, and the yen's weakness abates."
Overall, most analysts remain upbeat to the former member of the Berkshire Hathaway equity portfolio. According to S&P Global Market Intelligence, the consensus recommendation among the 16 analysts following the stock that it tracks is a Buy.
However, analysts’ price targets have struggled to keep up with HPQ's rally this year. Currently, the average price target price for HPQ stock is $34.07, a discount of about 8% to current levels.
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