HP's (HPQ) fiscal third-quarter personal systems revenue growth is expected to come in "slightly better" than the company's guidance, buoyed by pricing actions and market share recovery, BofA Securities said Wednesday.
The brokerage expects the personal computer maker to log year-over-year revenue growth of 8% in its personal systems business for the third quarter when it reports results Aug. 26. The results are likely to be driven by pricing actions and "residual pull-in," BofA analyst Wamsi Mohan said in a note to clients. That would be "slightly better" than HP's own projections, Mohan wrote.
In May, the company guided to a "below seasonal revenue performance" in the division in the quarter, "given first-half demand pull forward ahead of commodity price increases," Chief Financial Officer Karen Parkhill said at the time, according to a FactSet transcript.
HP recovered PC market share in the second quarter of the 2026 calendar year, after losing around 130 basis points in the previous three-month period worldwide, BofA said Wednesday, citing preliminary industry data. In the US, the company's second-quarter market share grew by 40 basis points year over year, according to the note.
"We see (the third quarter) as another transition quarter, with the durability of (personal systems) demand, supply of memory, and the pace of mitigation actions (to offset memory headwinds) as the key points of debate," Mohan said.
On the May call, Parkhill said HP expected personal systems margin to "reach a trough or a low point" in the fourth quarter due to the increasing cost of memory in the second half. Margins are expected to normalize in the first half of fiscal 2027 due to pricing dynamics and lapping easier revenue and margin comparisons, BofA said Wednesday.
For the fourth quarter, the brokerage expects HP's personal systems revenue to decline by a low- to mid-single-digit percentage sequentially due to demand pull-in and higher exposure to consumer personal systems revenue, with the division's operating margins seen slightly below 4%.
BofA expects the company to maintain its overall full-year guidance. In May, HP said it anticipated fiscal 2026 adjusted earnings between $2.90 and $3.10 a share. The current consensus on FactSet is for non-GAAP EPS of $3.02.
The brokerage reiterated its underperform rating on HP's stock with an $18 price objective, citing factors such as slower PC unit growth and margin pressure.
The company's shares were up 2.1% in Wednesday afternoon trade, bringing its year-to-date gains to 37%.
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