HPQ Stock Forecast: Momentum Trading Buy Rating For The PC Market Leader

motek 1The HPQ stock momentum trading article was written by Chloe Peng, Analyst at I Know First. Master of Science of Finance candidate at Brandeis University.


  • HPQ has risen by 11.75% during the past 3 months, following the big decline due to the Covid-19 outbreak.
  • HP reached 24.9% share in the PC market in Q1 2020, achieving almost the same market share with the largest player Lenovo.
  • I expect the PC sales growth to be short-term and I have a short-term bullish momentum trading outlook for HPQ.
HPQ Stock Forecast - 3 months

The electronic device industry experienced stagnations along the supply chain since March due to the coronavirus outbreak. It might not be the perfect time for PC makers to outgrow others. People are not sure when things will become normal, but I expect the impact to last for at least another year. In this article, I will discuss with you the performance of HP’s businesses, the impact of COVID-19 to PC shipments and my outlook for the company.

HP Becomes The Second Largest Vendor In The PC Market

HP Inc (NYSE: HPQ) is a provider of personal computing and other access devices, imaging and printing products, and related technologies, solutions and services. Its personal systems segment provides commercial and consumer desktop and notebook personal computers, workstations and other related accessories, software, support and services.

(Source: ZDNet)

It is HP’s largest division, generating around 66% of total revenue. In the following chart, you see that HP’s PC market share has mostly increased since 2012, reflecting an overall trend of consolidation within the PC market. HP’s PC market share reached 24.9% in Q1 2020, making HP the second largest PC vendor behind Lenovo. Also, HP realized 20.2% sales growth in Q2 year-by-year, resulting from the stay-at-home and work-from-home order.

HPQ Stock Forecast - pc market
(Source: Statista)

But I don’t want you to be too optimistic with the situation. The sales boost will only be a short-term result. On the long run, the overall PC market is generally declining. The PC market has gone through 7 years of worldwide decline before the modest growth in 2019. Besides, HP still faces intense competitions in the market and its PC shipment is hurt by the virus outbreak. See the chart below of how the global PC shipments is performing.

HPQ Stock Forecast - pc shipments

The Printing Business Is A Pain For HP

Even though HP’s laptops have been in demand as more people work from home, the company said that sheltering in place was having a negative impact on its corporate printing business. It’s intuitive that since employees are based at home, there is no need for documents to be printed out. In fact, many companies are busy seeking for digitalization of workflow thanks to the COVID-19, which boosted the IT service industry a lot.

Printing, especially printer supplies, has long been a money-maker for HP, which sells high-margin ink cartridges to its printer customers. But in the past few years, as both consumers and businesses print less, printing revenue and profits have been on a gradual decline. What’s worse, the revenue hurts even more with the pandemic ongoing.

printing business

The company’s CEO said that the setbacks are temporary. He expects the printing business to go back to normal when people are getting back in office. However, I cast doubt on his projection. Some workers might not go back to the office in the near future. For example, Twitter employees can work from home indefinitely and Slack Technology sees the possibility of a far-less populated office space in the future.

With the possibility of a huge decline in the use of office, it is hard for me to have a positive opinion on HP’s once lucrative business segment.

HP’ s Earning Beat Estimations In The Past Quarters

In the following chart you see that HP has been doing well for the past 4 quarters, beating earning estimations continually. Even though the adjusted Q2 2020 EPS of $0.51 is down 3.8% from Q2 2019, it is still better than analysts’ projections.

HPQ momentum trading Stock Forecast - earnings
(Source: Yahoo Finance)

In the Q2 report, the company says that it is seeing strong demand in notebook PC orders and Instant Ink subscriptions, as well as growing interest in 3D printing and digital manufacturing in key verticals such as healthcare. However, it gives a cautious Q3 EPS outlook of $0.39 to $0.49, which is slightly below wall street’s estimation of $0.43. This is a sign that HP itself realizes the satisfying Q2 results are temporary. HP projects to release its Q3 2020 on Aug 19 2020 and I’m curious to see what the actual numbers are.


HP becomes the second largest vendor in the PC market and achieved strong sales growth in Q2. I expect the satisfying growth to be short-term, because the overall PC market has been declining for 7 years and the supply chain takes time to recover from the COVID-19 impact.

As the US market gets nervous on the second wave of the virus, I believe HPQ will decrease a bit with the market. However, you see that the I Know First algorithm still gives a one-year bullish forecast with HPQ. It’s possible that HPQ reaches its fair value of $27.4 and I have a buy rating for short-term and mid-term investors.

HPQ momentum trading Stock Forecast

Past Momentum Trading Success with HPQ Stock Forecast

On November 17 2019, I Know First Algorithm gave a bullish 3-month HPQ stock forecast, which ranked as the one of the top performing predictions with a return of 10.85% in 3 months. See charts below.

momentum trading heatmap
momentum trading chart

Here at I Know First, our AI-based algorithm has modeled and predicted assets price movement worldwide for short-term and long-term time horizons, ranging from 3 days to a year. Since 2011, we have been providing daily momentum trading forecasts, gold prediction, Forex forecast, oil prices forecast, and, in particular, top tech stocks. Today, we are producing daily forecasts for over 10,500 assets. These forecasts generated by our quant trading tool are used by institutional clients, as well as private investors and traders to identify the best investment opportunities in the market.

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Please note-for trading decisions use the most recent forecast.