HP (HPQ) Valuation in Focus After JPMorgan Downgrade and Evolving PC Market Pressures

HP (HPQ) shares came into focus after JPMorgan downgraded the stock, citing a challenging period ahead for the company’s PC business. As the Windows 10 replacement cycle winds down, investors are watching as key headwinds emerge.

See our latest analysis for HP.

HP’s share price has struggled this year, weighed down by sector headwinds and investor caution around PC demand and cost pressures. Despite a modest 5% share price gain over the past month, the year-to-date share price return is -13.6%, while the 1-year total shareholder return sits at -21%. This sends a clear signal that momentum has faded compared to its strong long-term track record. Five-year total shareholder returns are still up an impressive 78%.

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With the stock trading just below analyst price targets and fundamentals appearing stable, the key question now is whether HP is undervalued at these levels or if the market has already priced in the slowdown and the potential for recovery ahead.

Most Popular Narrative: 0.8% Undervalued

HP’s most popular narrative points to a fair value of $28.28 per share, almost exactly matching the latest closing price of $28.07. The market’s current pricing suggests little room for surprises, but the narrative reveals some powerful themes under the surface.

Accelerating adoption of AI-driven PCs and growth in premium device segments are fueling stronger-than-expected revenue growth, with AI PCs now over 25% of HP's mix and expected price uplifts of 5 to 10 percent, which directly supports higher top-line sales and margin expansion.

Read the complete narrative.

Curious what numbers justify this razor-thin margin between price and fair value? The underlying assumptions are bolder than you might think, with massive projected growth drivers and shifts in profitability that could flip the thesis. Discover the precise levers that analysts believe tip the scale.

Result: Fair Value of $28.28 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, persistent declines in HP's core print segment and fierce price competition in hardware could still derail these optimistic growth assumptions and put pressure on margins.

Find out about the key risks to this HP narrative.

Build Your Own HP Narrative

If you see things differently or want to dig into the details for yourself, you can build your own HP narrative in just a few minutes. Do it your way.

A great starting point for your HP research is our analysis highlighting 3 key rewards and 3 important warning signs that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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