HP Reports Lower Profit Than Anticipated, Reduces Forecast Regarding Tariff Influence
HP Inc. Reports Lower-Than-Expected Earnings Due to Tariff Impacts
In a sudden setback, HP Inc. (HPQ) reported weaker-than-expected earnings for its fiscal second quarter of 2025, primarily impacted by tariff implications. The PC and printer manufacturer's shares plummeted by 7% the following day.
HP's quarterly earnings failed to meet the analysts' expectations, with adjusted earnings per share of $0.71, falling short of the anticipated $0.81[2]. Although the company's revenue grew by over 3% year-on-year to $13.22 billion, this was barely enough to compensate for the slip in earnings[1].
Personal Systems sales witnessed a significant boost of 7% to $9.0 billion. However, the printing segment experienced a setback, with sales sliding 4% to $4.2 billion[2].
CEO Enrique Lores acknowledged the impact of a "dynamic regulatory environment," referring to the ongoing trade tensions and tariffs[2]. Despite the challenges, the company swiftly took measures to expand its manufacturing footprint and cut its cost structure[2]. However, additional tariff costs incurred during the quarter couldn't be fully mitigated, necessitating price increases to help alleviate the cost pressure[2].
HP also revised its full-year adjusted earnings per share projections in the wake of increased macroeconomic uncertainty. The company now anticipates full-year adjusted EPS between $3.00 and $3.30, a significant drop from its earlier outlook of $3.45 to $3.75[3].
Following the earnings report, JPMorgan reduced its price target for HP's stock from $30 to $27[2]. The company's shares have seen a significant decline this year, losing about 22% of their value.
In the face of these challenges, HP remains committed to expanding its manufacturing footprint and reducing its cost structure. Adapting to the changing regulatory environments will be crucial to maintain profitability and growth amidst ongoing trade tensions.
[1] HP reports worse-than-anticipated profit, lowers full-year outlook due to tariff impact, TheStreet.com, Retrieved from https://www.thestreet.com/investing/stocks/hpq/hp-reports-worse-than-anticipated-profit-lowers-full-year-outlook-due-to-tariff-impact-16323409 (May 14, 2025)
[2] HP Inc. Q2 2025 Earnings Call Transcript, Seeking Alpha, Retrieved from https://seekingalpha.com/article/4423752-hp-hpq-q2-2025-earnings-call-transcript (May 14, 2025)
[3] HP Lowers Full-Year Adjusted EPS Outlook, StockNews, Retrieved from https://www.stocknews.com/stock/hpq/articles/hp-lowers-full-year-adjusted-eps-outlook/ (May 14, 2025)
In the wake of tariff impacts, HP Inc. (HPQ) is rethinking its finance and investing strategies. Adapting its business model, the company is focusing on expanding its manufacturing footprint and cutting costs to cope with ongoing trade tensions, considering the dynamic regulatory environment. In the financial market, the impact on HP's shares has been noticeable, with JPMorgan revising its price target from $30 to $27 due to these challenges.
