HP: BofA downgrade weighs on the stock

(CercleFinance.com) - On Friday, HP shares posted the second biggest drop in the S&P 500 index on the New York Stock Exchange, as Bank of America downgraded its recommendation on the stock to 'neutral' from 'buy'.


At 10:30 a.m., the stock was down 3.4%, while the S&P was up 0.2%.

In a note, Bank of America believes that the risks surrounding a downturn in printing margins more than outweigh the strength of the PC business.

According to BofA, the good performance of the PC division - and especially of AI-powered devices - will be counterbalanced by the pressure expected to be exerted on the printing division, which has just enjoyed several buoyant years.

The IT manufacturer is likely to suffer from price pressures on both its consumer and professional products, due to competition from Japanese manufacturers taking advantage of the weak yen.

In this context, growth in earnings per share (EPS) should only result from share buybacks and subsequent share cancellations, warns the intermediary, who has a price target of $37.

HP shares are still up over 16% since the start of the year, giving a market capitalization of $34.3 billion.

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