Personal computer and printer maker HP matched earnings expectations for its fiscal third quarter but its sales were light. It also guided lower for the current period. HPQ stock dropped Wednesday on the news.
The Palo Alto, Calif.-based company late Tuesday said it earned an adjusted 86 cents a share on sales of $13.2 billion during the quarter ended July 31. Analysts polled by FactSet had expected HP earnings of 86 cents a share on sales of $13.38 billion. On a year-over-year basis, HP earnings fell 17% while sales declined 10%.
For the current quarter, HP predicted adjusted earnings of 91 cents a share, based on the midpoint of its outlook. Wall Street had called for earnings of 95 cents a share in the fiscal fourth quarter.
"While we expect another quarter of sequential growth in Q4, the external environment has not improved as quickly as anticipated and we are moderating our expectations as a result," Chief Executive Enrique Lores said in a news release.
HPQ Stock Falls After Report
On the stock market today, HPQ stock sank 6.6% to close at 29.29. During the regular session Tuesday, HPQ stock rose a fraction to close at 31.37.
In its fiscal third quarter, HP's PC sales dropped 11% year over year to $8.9 billion. The company's printing division reported a sales decline of 7% to $4.3 billion.
At least eight Wall Street firms cut their price targets on HPQ stock after the earnings report.
Wells Fargo analyst Aaron Rakers reiterated his underweight rating on HPQ stock, noting the company's "bleak outlook."
"Longer-than-expected channel inventory de-stocking in PCs and what appear to be structural demand and competitive issues in (its) print (business) support our view," he said in a note to clients.
HP ranks eighth out of 14 stocks in IBD's Computer Hardware/Peripherals industry group, according to IBD Stock Checkup. The computer hardware group is currently first out of 197 industry groups that IBD tracks. HPQ stock has an IBD Composite Rating of 65 out of 99.
Ahead of the earnings report, HPQ stock had formed a flat base with a buy point of 33.90, according to IBD MarketSmith charts.
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