Warren Buffett’s Berkshire Hathaway (NYSE:BRK.A)(NYSE:BRK.B) has cut its stake in HP (NYSE:HPQ) stock. Per an SEC filing, Berkshire sold approximately 5.5 million shares of the manufacturer of personal computing, printing products, and accessories valued at about $158.49 million. Per a Reuters report, Berkshire now has 11.7% stake in HPQ, down from 12.2%.
Buffett’s Berkshire took a significant stake in HP by purchasing approximately 121 million shares in April 2022. However, HP stock has underperformed since then due to the demand-constrained environment and industry-wide inventory issues that weighed on its sales and profitability.
HP’s net revenue declined 19%, 22%, and 10% year-over-year in Q1, Q2, and Q3, respectively, of the current Fiscal year. Management blamed soft demand and pricing pressure due to the elevated channel inventory across the industry for this decline.
Nonetheless, HP’s investments in software, security, and AI (Artificial Intelligence) enable it to develop new solutions, which augur well for future growth. Further, HP is optimizing its portfolio by reducing the number of SKUs (stock-keeping units) and lowering structural costs to cushion margins. As the company makes efforts to reaccelerate growth, let’s look at the Street’s projection for HPQ stock.
Is HPQ a Buy or Sell?
HP is taking steps to improve its financials. However, macro conditions are not improving as fast as the company expected. Further, aggressive pricing in the PC market, a sluggish demand environment in China, and weak enterprise demand pose challenges. Given the near-term headwinds, the company moderated its Q4 and full-year outlook. Consequently, analysts remain sidelined on the stock.
HPQ stock has one Buy, seven Hold, and three Sell recommendations for a Hold consensus rating on TipRanks. Moreover, analysts’ average price target of $29.55 implies a limited upside potential of 4.31%.
While Buffett’s investment in HP has turned sour, his top holding Apple (NASDAQ:AAPL) stock has performed well, rising about 34.65% year-to-date. Meanwhile, the image below shows Buffett’s top holdings based on the most recent 13F filing.