HP (NYSE:HPQ) Shares Gap Down - Here's Why

Key Points

• HP shares fell sharply, opening at $27.86 versus a prior close of $30.52, as investors focused on rising memory-chip costs and a decline in non-GAAP operating margin to 6.5% from 7.1%.
• HP reported strong fiscal third-quarter results, with revenue up 12.5% to $15.7 billion and non-GAAP EPS of $0.83 beating estimates. Management also raised its fiscal 2026 EPS outlook to $3.19–$3.29 and increased its free-cash-flow forecast.
• Despite the earnings beat, concerns remain over weaker printing revenue, lower GAAP profit and whether price increases and AI-PC demand can offset component costs and slowing traditional PC sales. Analysts’ consensus rating is “Reduce,” with an average price target of $24.50.

HP Inc. (NYSE:HPQ - Get Free Report)'s stock price gapped down before the market opened on Thursday . The stock had previously closed at $30.52, but opened at $27.86. HP shares last traded at $28.4970, with a volume of 10,904,864 shares.

Trending Headlines about HP

Here are the key news stories impacting HP this week:

• Positive Sentiment: HP reported fiscal third-quarter revenue of $15.7 billion, up 12.5% year over year, while non-GAAP EPS of $0.83 exceeded analyst expectations. Personal Systems revenue increased 18% to $11.8 billion, supported by pricing, premium devices and demand for AI-enabled PCs. HP Inc. Reports Fiscal 2026 Third Quarter Results
• Positive Sentiment: Management raised its fiscal 2026 EPS outlook to $3.19-$3.29 and lifted its free-cash-flow forecast. Fourth-quarter adjusted EPS guidance of $0.69-$0.79 also topped the consensus estimate, helped by planned price increases and expected U.S. tariff refunds. HP forecasts strong fourth-quarter profit on price hikes, US tariff refunds
• Neutral Sentiment: HP signed a multi-year global Wi-Fi patent cross-licensing agreement with Huawei. The deal provides access to technology but may draw attention because Huawei remains subject to U.S. restrictions. HP partners with U.S.-blacklisted Huawei for licensing the Chinese company's WiFi tech
• Negative Sentiment: Investors are concerned that higher memory-chip costs will squeeze PC profitability. HP’s non-GAAP operating margin declined to 6.5% from 7.1% a year earlier, even as revenue grew, raising questions about how quickly margins can recover. HP stock slides 5% as memory costs pressure PC margins
• Negative Sentiment: GAAP net income fell to $661 million from $763 million, and GAAP EPS declined to $0.71 from $0.80. Printing revenue also decreased 2% to $3.9 billion, highlighting weakness outside the PC business. HP Revenue Rises as Higher Prices Offset Fewer PC Sales
• Negative Sentiment: The earnings beat and raised outlook were insufficient against elevated market expectations. Investors are questioning whether price increases and AI-PC demand can offset rising component costs and fewer traditional PC sales. HP tumbles even as it boosts annual earnings and free cash flow forecast

Analyst Upgrades and Downgrades

Several equities research analysts recently weighed in on the stock. UBS Group increased their price objective on shares of HP from $26.00 to $28.00 and gave the stock a "neutral" rating in a research note on Thursday. Evercore set a $32.00 target price on HP in a report on Monday. Citigroup increased their price target on HP from $20.00 to $25.00 and gave the stock a "neutral" rating in a research report on Thursday, May 28th. Wells Fargo & Company boosted their price objective on HP from $18.00 to $20.00 and gave the company an "underweight" rating in a research report on Thursday, May 28th. Finally, Barclays upped their price objective on HP from $16.00 to $19.00 and gave the stock an "underweight" rating in a research note on Thursday, May 28th. Two equities research analysts have rated the stock with a Strong Buy rating, eight have given a Hold rating and five have issued a Sell rating to the stock. Based on data from MarketBeat.com, HP presently has a consensus rating of "Reduce" and an average price target of $24.50.

HP Price Performance

The firm has a market capitalization of $26.24 billion, a PE ratio of 10.58, a P/E/G ratio of 4.90 and a beta of 1.17. The firm has a fifty day moving average price of $26.11 and a 200 day moving average price of $22.63.

HP (NYSE:HPQ - Get Free Report) last posted its quarterly earnings data on Wednesday, August 26th. The computer maker reported $0.83 EPS for the quarter, topping analysts' consensus estimates of $0.66 by $0.17. The firm had revenue of $15.68 billion during the quarter, compared to analyst estimates of $14.44 billion. HP had a net margin of 4.45% and a negative return on equity of 581.36%. The company's revenue was up 12.5% on a year-over-year basis. During the same quarter last year, the business posted $0.75 EPS. HP has set its FY 2026 guidance at 3.190-3.290 EPS and its Q4 2026 guidance at 0.690-0.790 EPS. On average, sell-side analysts expect that HP Inc. will post 3.03 EPS for the current year.

HP Dividend Announcement

The business also recently disclosed a quarterly dividend, which will be paid on Wednesday, October 7th. Investors of record on Wednesday, September 9th will be given a dividend of $0.30 per share. The ex-dividend date of this dividend is Wednesday, September 9th. This represents a $1.20 dividend on an annualized basis and a yield of 4.2%. HP's payout ratio is presently 44.28%.

Insider Activity at HP

In other news, insider David P. Mcquarrie sold 21,048 shares of the company's stock in a transaction on Friday, August 7th. The shares were sold at an average price of $29.98, for a total value of $631,019.04. Following the transaction, the insider directly owned 39,580 shares of the company's stock, valued at approximately $1,186,608.40. This represents a 34.72% decrease in their ownership of the stock. The transaction was disclosed in a legal filing with the SEC, which can be accessed through this link. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. In the last 90 days, insiders have sold 52,620 shares of company stock worth $1,478,622. Insiders own 0.18% of the company's stock.

Hedge Funds Weigh In On HP

A number of hedge funds have recently added to or reduced their stakes in the company. HighTower Advisors LLC increased its stake in shares of HP by 12.0% during the 2nd quarter. HighTower Advisors LLC now owns 154,126 shares of the computer maker's stock worth $3,382,000 after purchasing an additional 16,455 shares during the last quarter. California State Teachers Retirement System boosted its holdings in HP by 2,151.8% in the second quarter. California State Teachers Retirement System now owns 35,563,906 shares of the computer maker's stock worth $780,272,000 after purchasing an additional 33,984,527 shares in the last quarter. Ameritas Advisory Services LLC acquired a new position in HP during the second quarter worth $232,000. HB Wealth Management LLC raised its holdings in HP by 5.8% during the second quarter. HB Wealth Management LLC now owns 75,531 shares of the computer maker's stock valued at $1,657,000 after buying an additional 4,157 shares in the last quarter. Finally, Saudi Central Bank lifted its position in shares of HP by 88.9% in the second quarter. Saudi Central Bank now owns 64,019 shares of the computer maker's stock worth $1,405,000 after buying an additional 30,135 shares during the last quarter. Institutional investors and hedge funds own 77.53% of the company's stock.

HP Company Profile

HP Inc is an American multinational information technology company that designs, manufactures and sells personal computing devices, printers and related supplies and services. Its product portfolio spans consumer and commercial notebooks and desktops, workstations, displays and accessories, as well as an extensive line of printing hardware that includes home, office and production printers. HP also provides consumables such as ink and toner, managed print services, device deployment and lifecycle support, and software for device and print management.

Founded from the original Hewlett‑Packard Company, HP Inc became a separately traded public company in 2015 following a corporate split that created Hewlett Packard Enterprise to focus on enterprise hardware and services.

This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to contact@marketbeat.com.

Continue following MarketBeat

Add MarketBeat as your preferred source on Google to see our latest stories in your feed.

Add As Preferred Source