Evidence That HP Is Growing PC Market Share and the Market for PCs

HP Inc. (NYSE: HPQ) reported its earnings last week, and some analysts believe a new trend could arise from it. The personal computer (PC) business is pushing into new markets, including upper-tier consumer notebooks and gaming desktops, a high-priced and high-margined niche. And while there are printing concerns, the solid quarter and growing market share are up. As a result, one key analyst weighed in on the stock.

Argus reiterated a Buy rating and raised its price target to $19 from $16 for the stock. In the firm’s view, HP is doing a solid job maintaining and expanding market share in PCs while driving more profit to the bottom line. The next challenge for the company is righting its printing business. Argus also believes that HP is managing through secular transitions and cyclical challenges, while boosting margins at an impressive pace.

Now despite the profit beat in the earnings report, the HP shares sold off by 5% on surprisingly weak trends in printing revenue, along with downbeat guidance for the current quarter. The results came as a surprise and disappointment, even after the company late in June laid out strategy for the printing business while sketching current market challenges.

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It was at a virtual investor event in June HP hosted that management laid out strategy for the company’s printing business. Previously HP reached an agreement to sell its remaining Marketing Optimization software assets to Open Text. The sale of this business supports the company’s strategy to streamline the portfolio while optimizing opportunities in core businesses. HP will work with Open Text to provide customers best of breed software options that integrate into document workflow solutions. Additionally, the company intends to reduce channel inventory and increase marketing spending in its printing supplies business.

HP also determined that, with digital imaging and cloud-based solutions reducing the need for hard copy and printed content, the use of discounts and incentives was proving counter-productive. Rather than encouraging customer sales, the uneven allocation of incentives created confusion and resentment among full-price customers and disrupted both direct sales and sales made by channel partners. Consequently, HP will fundamentally change how it runs and manages the supplies business in order to drive “a more consistent value proposition” to channel partners and end customers.

Shares of HP were last up 1.1% at $14.51 Monday morning, with a consensus analyst price target of $15.57 and a 52-week trading range of $8.91 to $14.82.

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