HP Inc. (NYSE:HPQ) came out with its third-quarter results last week, and we wanted to see how the business is performing and what industry forecasters think of the company following this report. Revenues were in line with forecasts, at US$14b, although statutory earnings per share came in 15% below what the analysts expected, at US$0.65 per share. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.
Taking into account the latest results, the consensus forecast from HP's 15 analysts is for revenues of US$55.5b in 2025. This reflects a modest 4.0% improvement in revenue compared to the last 12 months. Statutory earnings per share are predicted to increase 7.7% to US$3.18. In the lead-up to this report, the analysts had been modelling revenues of US$55.8b and earnings per share (EPS) of US$3.27 in 2025. So it looks like there's been a small decline in overall sentiment after the recent results - there's been no major change to revenue estimates, but the analysts did make a minor downgrade to their earnings per share forecasts.
The consensus price target held steady at US$36.04, with the analysts seemingly voting that their lower forecast earnings are not expected to lead to a lower stock price in the foreseeable future. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. The most optimistic HP analyst has a price target of US$42.00 per share, while the most pessimistic values it at US$30.00. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the HP's past performance and to peers in the same industry. One thing stands out from these estimates, which is that HP is forecast to grow faster in the future than it has in the past, with revenues expected to display 3.2% annualised growth until the end of 2025. If achieved, this would be a much better result than the 1.5% annual decline over the past five years. Compare this against analyst estimates for the broader industry, which suggest that (in aggregate) industry revenues are expected to grow 7.7% annually for the foreseeable future. So although HP's revenue growth is expected to improve, it is still expected to grow slower than the industry.
The Bottom Line
The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. On the plus side, there were no major changes to revenue estimates; although forecasts imply they will perform worse than the wider industry. The consensus price target held steady at US$36.04, with the latest estimates not enough to have an impact on their price targets.
Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. At Simply Wall St, we have a full range of analyst estimates for HP going out to 2026, and you can see them free on our platform here..
And what about risks? Every company has them, and we've spotted 3 warning signs for HP (of which 1 is a bit concerning!) you should know about.
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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.