HPQ Earnings: HP Stock Plunges 15% as Tariffs Blamed for Profit Miss

The stock of HP Inc. (HPQ) is down 15% after the personal computer maker’s quarterly profits missed Wall Street targets.

Management blamed the earnings miss on the impact of import tariffs that have been implemented by the administration of U.S. President Donald Trump. The Silicon Valley-based company announced earnings per share (EPS) of $0.71, which was below the $0.80 consensus expectation of analysts.

Revenue for the company’s Fiscal second quarter came in at $13.22 billion, which was slightly ahead of the $13.14 billion expected on Wall Street. Sales were up 3.3% from a year earlier. HP also reported net income of $406 million, or $0.42 per share, down from $607 million, or $0.61 per share, a year ago.

HP’s balance sheet. Source: Main Street Data

Difficult Outlook

In terms of guidance, HP said that for the current quarter, it expects to report earnings of $0.68 to $0.80 a share. That’s below the $0.90 per share that Wall Street had penciled in for the company. Full-year earnings are expected in a range of $3 to $3.30 a share, said management. That too was below the $3.49 EPS expected among analysts.

“While results in the quarter were impacted by a dynamic regulatory environment, we responded quickly to accelerate the expansion of our manufacturing footprint and further reduce our cost structure,” HP CEO Enrique Lores said in the company’s earnings statement. “Through our actions, we expect to fully mitigate the increased trade-related costs by Q4.”

HPQ stock has declined 15% this year.

Is HPQ Stock a Buy?

HP stock has a consensus Hold rating among eight Wall Street analysts. That rating is based on three Buy, four Hold, and one Sell recommendations issued in the last three months. The average HPQ price target of $32.63 implies 18.31% upside from current level. These ratings are likely to change after the company’s financial results.

Read more analyst ratings on HPQ stock