HP Inc. initiated with a Neutral at Citi

Citi analyst Asiya Merchant initiated coverage of HP Inc. with a Neutral rating and $32 price target. The analyst started a number of technology hardware names with a “mixed stance.” The hardware sector is going through a period of cyclical downturn, following a sharp acceleration in pandemic-induced demand, the analyst tells investors in a research note. The firm says commercial PCs are seeing early signs of recovery while datacenter compute and storage could continue to remain pressured. Given the “significant correlation” of stock price performance and earnings estimate revisions, Citi is “selectively biased” towards companies that are strongly positioned to areas that are poised for recovery, have mix shift enabled margin expansion and “de-risked” estimates. Citi says HP’s Neutral rating is predicated on concerns surrounding its “mixed” revenue share metrics in PC relative to peers and secular challenges in Print.