HP share price (HPQ): HP stock tumbles amid weaker sales and outlook

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HP share price

 HP reported below expected quarterly results and financial outlook amid challenging macroeconomic environment and lower PC sales. Let us take a deep dive into HP's third quarter results.

HP Q3 2022 Revenue

HP share price fell after its June quarter revenue fell 4% on-year to $14.7 billion, below street estimates amid lower overall consumer demand and 32% decline in the number of notebook computer units sold. HP's personal computer sales in the third quarter dropped 3% on year to $10.1 billion. Commercial PC revenue rose 7% while consumer PC revenue plummeted 20%.

Source: HP Q3 Presentation

So this is something that we were expecting, a slowdown in consumer, but clearly the slowdown was bigger than we were expecting," HP CEO Enrique Lores.

HP Q3 Earnings 2022

Third quarter diluted net EPS was $1.08, up from $0.92 in the last year and above the previously provided outlook of $0.91 to $0.96, beating street estimates.

Source: HP Q3 Presentation, cc: constant currency terms

HP Q3 2022 Results: Operating Margin

Amid weak sales, Operating margin fell to 8.7% with margins in HP's personal systems segment down 1.5%. Margins did rise by 2.3% in the printing business as HP carefully managed costs and pushed through price increases. 

HP Quarterly Results Financial Outlook 

HP has slashed its Earnings outlook amid weakening PC sales. For the fourth fiscal quarter, HP sees EPS in a range of $0.79 to $0.89. Analysts had estimated earnings of $1.06 per share. HP slashed its full-year earnings outlook to $4.02-$4.12 a share, below street estimates.

HP Poly Acquisition

On Monday, HP declared that it had completed its $3.3 billion purchase of Poly, a maker of enterprise headsets and video conferencing gear. HP acquired Poly to drive innovation and scale in two key growth areas: peripherals and workforce solutions.

HP Q3 Results 2022: Analysts View

Based on 25 Wall street analysts offering stock ratings for HP, currently, 8% are recommending Buy, 56% are recommending Hold while 36% including Wells Fargo are recommending ‘Sell’ with share price target between $30-$35.

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