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Investing.com -- Evercore ISI downgraded HP Inc to In Line from Outperform as there is limited upside to earnings and cash flow estimates as tariff-related PC pull-ins may cloud demand in 2026.
Evercore said much of the recent strength in HP’s PC unit could be temporary.
“The risk we see for HP could be that much of the strength, especially in PCs, is from pull-ins due to tariff worries and that could create some risk to estimates in FY26, especially in H1,” the note said.
While the PC market is expected to expand in the mid-single digits with Windows 11 upgrades driving purchases into 2026, Evercore pointed to offsetting weakness in printing.
“At the same time the headwinds on print side (especially office) remain, and we could see Dell get more aggressive on the PC side given a renewed focus on Dell’s end to stabilize share.”
HP has guided for fourth-quarter earnings of 87 to 97 cents a share, in line with consensus estimates, and maintained its annual free cash flow outlook of $2.6 billion to $3 billion for fiscal 2025.
Management also expects PC margins to remain within the 5% to 7% range, supported by a shift toward AI-enabled PCs that could represent half of shipments within the next two years.
Evercore left its price target unchanged at $29.
“Our downgrade reflects the fact that the stock is trading around our price target of $29 and for us to see further upside we need to see a clear path to EPS/FCF numbers moving higher, but that is unlikely to happen in the near-term given a host of cross currents,” analysts wrote.