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Citi analyst Jim Suva downgraded shares of HP Inc (NYSE:HPQ) to Neutral from Buy with a $38.00 price target, down from $40.00.
The downgrade comes after Citi materially lowered the expectations for the PC market.
“Supply chain challenges, exacerbated by recent lockdowns, combined with the macro inflationary woes are likely to temper PC unit demand. We now model 2022 unit growth of -9% (vs prior expectations of flattish). We believe unit mix will be skewed towards high-end models (Commercial, gaming) while Chromebooks (35-40 mln units in CY21) and low end consumer PCs will be most impacted as OEMs/ODMs prioritize higher margin unit mix. We are not modeling units to decline to pre pandemic levels of ~250 mln units as we believe the active PC installed base is higher and mix shift to notebooks implies a shorter replacement cycle (relative to desktops),” Suva said in a client note.
Elsewhere, the analyst maintained a Buy rating on Dell (NYSE:DELL) and NetApp (NASDAQ:NTAP) shares while remaining bearish on Hewlett Packard Enterprise (NYSE:HPE).
HPQ stock is down 3% in pre-open Monday.
