HP Inc. (NYSE:HPQ) stock climbed on Friday following the company’s April quarter financial results, which outpaced Wall Street expectations.
The solid performance triggered a wave of price target increases from major financial institutions, shifting market sentiment despite a cautious outlook for the second half of the fiscal year.
• HP stock is showing exceptional strength. Why is HPQ stock up today?
Wall Street Lifts Price Forecasts
A multitude of equity analysts adjusted their valuation models upward on Thursday to reflect the earnings beat. TD Cowen maintained its hold rating on HPQ but substantially raised its price target to $26 from $20.
Other notable adjustments included UBS raising its price target to $26, Citigroup moving to $25, JP Morgan targeting $26, and Morgan Stanley increasing its forecast to $19. BofA Securities adjusted its price forecast to $18, while Wells Fargo and Barclays adjusted theirs to $20 and $19, respectively.
TD Cowen Evaluates Product Mix and Margins
In a Wednesday earnings update, TD Cowen analyst Krish Sankar highlighted that HPQ navigated the tight memory supply well during the first half of the fiscal year through “cost reductions, favorable product mix, and price actions.”
The company’s updated fiscal 2026 outlook projects earnings per share (EPS) between $2.90 and $3.10, alongside free cash flow of $2.8 billion to $3 billion. Sankar noted this compares favorably to the previous quarter’s expectation of tracking toward the lower end of those ranges.
Personal Systems Navigates Inflationary Headwinds
HPQ reported a 13% year-over-year increase in Personal Systems revenue, supported by commercial customers pulling demand forward and Windows 11 refresh cycles in the Asia Pacific and Japan and Europe, the Middle East and Africa regions. Total units dropped 7% year-over-year.
Sankar warned that operating margins for Personal Systems will likely trend below the 5% to 7% target range for the rest of fiscal 2026. Sankar said, for the second half of fiscal year 2026, “the headwinds from higher memory costs and other cost inflation will likely lead to below seasonal demand due to negative price elasticity as PC price increases fully set in…”
AI PCs Gain Momentum
A bright spot for retail traders to monitor is the accelerating adoption of next-generation hardware. HP increased its AI PC product mix to 44% in the second fiscal quarter, up from 35% in the first quarter.
TD Cowen expects this mix to reach 60% to 70% by fiscal 2027. Sankar noted that while investors remain focused on cloud capacity, “agentic AI at the edge could be an emerging theme in the coming year.”
HPQ Stock Price Activity: HP shares were up 8.33% at $27.05 at the time of publication on Friday, according to Benzinga Pro data.
Photo: Sklo Studio via Shutterstock
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