Cautious forecasts for the current fiscal year are dragging HP’s stock down 📉

HP (HPQ.US) shares are down more than 3.5% in pre-market trading despite stronger-than-expected results and a higher EPS forecast for 2025. One of the factors weighing on investor sentiment is the issue of tariffs and their impact on profitability.

HP shares drop in pre-market trading. Source: xStation

The company achieved $13.5 billion in revenue in Q1 24/25 (+2% y/y), compared to the consensus estimate of $13.35 billion. The best-performing segment was personal systems, which grew by 4.7% y/y. On the other hand, the printing segment weakened sales, declining by 2.4% y/y.

Adjusted earnings per share (EPS) came in at $0.74, in line with expectations.

The market was somewhat disappointed by the outlook for Q2, as the company forecasts adjusted EPS in the range of $0.75–$0.85 (midpoint: $0.80), which is slightly below the consensus expectation of $0.85.

However, the full-year forecast for fiscal 2024/25 looks slightly better. The company expects EPS between $3.45 and $3.75 (midpoint: $3.60) compared to the consensus estimate of $3.59. Nonetheless, the beat is not significant enough to strengthen HP's stock price.

The company is also declining amid announced trade tariffs on Chinese products. HP’s current financial projections account for costs related to Trump administration policies, and the company has stated that by the end of 2025, 90% of its production will take place outside of China. However, it is important to note that Trump’s stance on trade policy remains volatile and difficult to predict, leading investors to approach HP’s forecasts with some caution.