Why HP Stock Sagged by 11% This Week

HPQ shares declined 11% this week after the company reported fiscal Q2 2025 results, with revenue up 3% year-over-year to $13.2 billion but adjusted net income falling to $678 million ($0.71 per share), missing analyst estimates of $0.79 per share. The company also lowered its full-year adjusted EPS guidance to $3.00-$3.30, down from the previous estimate of $3.45-$3.75, citing anticipated tariff impacts.

Analysis

HP (HPQ) experienced a significant 11% decline in its share price over the past five trading days following the release of its fiscal second quarter 2025 results and subsequent guidance revision. While the company reported a 3% year-over-year increase in net revenue to $13.2 billion, surpassing analyst expectations of under $13.1 billion, its non-GAAP adjusted net income fell sharply to $678 million, or $0.71 per share, from $812 million in the prior-year period. This bottom-line figure missed the average analyst estimate of $0.79 per share. CEO Enrique Lores highlighted solid revenue growth driven by commercial personal systems. However, HP lowered its full-year adjusted per-share earnings guidance to a range of $3.00 to $3.30, a considerable reduction from the previous estimate of $3.45 to $3.75, attributing this revision to the anticipated impact of tariffs on components sourced internationally. The company also projected free cash flow of $2.6 billion to $3 billion for the fiscal year. The challenging PC market environment, coupled with the uncertainty surrounding tariffs, contributes to a cautious outlook for the stock.

Key Decisions for Investors

• Investors should note the market's strongly negative reaction to HP's earnings miss and significantly lowered full-year profit guidance, primarily attributed to impending tariff impacts.
• Consider the dichotomy of HP's 3% revenue growth against a substantial decline in adjusted net income, which signals potential margin pressures and challenges in translating top-line gains into profitability.
• Given the reduced earnings outlook, ongoing tariff concerns, and a difficult PC market, investors might re-evaluate their positions and closely monitor future earnings for signs of margin stabilization and the actual materialization of tariff effects on costs and profitability.