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Shares of HP Inc. (NYSE:HPQ) are down nearly 4% in premarket Friday after a Wells Fargo analyst downgraded to Underweight from Equal Weight with a $30 per share price target.
The analyst believes the chances of HP shares experiencing underperformance through the remainder of 2022 and into 2023 are “increasing.”
“While we maintain a positive view on HP’s strong FCF and execution on driving a richer portfolio mix (commercial PCs, consumer premium/gaming, peripherals, Instant Ink, etc.), we think deteriorating PC demand and macro sensitivity in print could result in material downward est. revisions,” the analyst said in a client note.
The Wells Fargo analyst is also concerned about potentially slowing share repo activity due to the all-cash takeover of Poly (NYSE:POLY) for $3.3 billion. The analyst also reminds investors that the company’s net debt position stands at an all-time high of $4.512 billion.
Within the IT Hardware sector, the analyst prefers Dell (NYSE:DELL) and Pure Storage (NYSE:PSTG).
