HP Looks Set for Soft Fiscal 2023 and Announces a Major Restructuring Program; Maintaining $30 FVE

We maintain our $30 fair value estimate for no-moat HP after it reported its fiscal 2022 fourth-quarter results. We saw few surprises in the print, but HP’s guidance for weak demand in fiscal 2023 and announcement of a large restructuring program were more noteworthy. HP’s poor forward-looking macroeconomic commentary matched PC rival Dell’s earlier this week, and the firm is not expecting demand to rebound in the short term. HP’s restructuring program didn’t come as a surprise to us, but is notable for its ambition to save $1.4 billion in annualized costs and reduce headcount by roughly 10%. While we expect HP to improve its profitability with these savings, it doesn’t alter our expectations for the firm to be vulnerable to cycles in its commoditylike markets that can create volatile earnings and inform our no-moat rating. We see shares as fairly valued.