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A BofA analyst is negative on both Dell Technologies (NYSE:DELL) and HP Inc (NYSE:HPQ) shares ahead of their earnings releases.
Dell is set to report F2Q23 earnings after market close on Thursday, August 25th, while HP Inc is set to post F3Q22 earnings results on Tuesday, August 30th.
In a research note on Dell, the analyst said it has cut its F23 revenue estimates to include lower PC revenues as their analysis suggests a weaker market trajectory in the second half, ~0.5pt of incremental FX headwind, and lower storage revenues as our Dell value-added reseller survey points to weaker demand signals and higher discounts. The analyst lowered the price target on Dell shares to $66 from $67.
“We expect a weaker PC trajectory given (1) weaker ODM data in July; (2) PC supply chain companies pointing to weaker demand signals; and (3) our pull forward analysis suggests weaker C22-C24 demand. We are cutting our Global PC model for C22 to ~285mn, below Dell’s expected ~330mn units. However, we note that Dell outgrows the market,” said the analyst, who has a Buy rating on Dell shares.
In a separate note on HP Inc, the analyst stated they are cutting PC estimates on weaker demand trends.
The analyst maintained an Underperform rating and $33 price target on the stock, telling investors they cut their revenue estimate to $14.9 billion, compared with the Street view of $15.7 billion.
“Revision embeds our view that FX will be an incremental negative headwind of ~0.5pt vs 3Q guide of 2pts. We also cut our PC estimate to $10.4bn (vs. $11.1bn consensus) given recent erosion in demand dynamics in this market. Our cuts to HPQ’s PC estimates are larger than those made to estimates for competitor Dell (set to report Thursday). We see some downside risk to our HPQ print revenue estimate of $4.5bn (vs. $4.8bn consensus), given commentary from competitors/partners that supply constraints negatively impacted hardware sales during the qtr,” explained the analyst.
