HP Inc (NYSE: HPQ) chief executive is convinced the company is fairly positioned to navigate Trump tariffs.
The multinational has diversified to build a “more resilient supply chain” over the past three years, as per Enrique Lores.
HP has already started manufacturing a “very relevant portion of products that will come to the US” in locations other than China.
HP stock is down about 10% this morning after offering muted guidance for its fiscal Q1.
Trump tariffs to weigh on HP margins
HP has confidence in its team’s ability to manage raised tariffs under Trump’s presidency.
Once the new tariffs are announced, “we’ll design the right supply chain footprint for the company,” the chief executive said as he spoke with Jim Cramer on his show last night.
On the downside, Enrique Lores expects higher component costs to continue to weigh on margins in the first half of 2025.
Still, the sell-off this morning may be an opportunity to load up on HP shares as its CEO said “We will perform better than market” in the coming year.
HP stock currently pays a healthy dividend of 2.82% which makes up for another good reason to have it in your portfolio.
AI PCs could help HPQ next year
HP has already started launching its next generation of AI-enabled PCs that it’s convinced will help significantly boost productivity and drive more business in 2025.
“We have some large customers that have decided to adopt AI PCs for their full workforce,” CEO Enrique Lores revealed last night on Mad Money.
Nonetheless, he doesn’t expect AI personal computers to be a threat to cloud companies like Salesforce.
In fact, “for many things, the cloud solutions they’re providing will be extremely valuable for our customers,” the chief executive added.
For the full year, HP now forecasts its adjusted per-share earnings to fall between $3.45 and $3.75 – roughly in line with analysts’ forecast.
Despite today’s weakness, HP stock is up some 35% versus its year-to-date low in April.
HP stock has upside to $40
HP stock may be worth buying on the recent weakness also because analysts at JPMorgan continue to see an upside in it to $40. That indicates the potential for an 11% gain from current levels.
The investment firm acknowledged near-term challenges, including competitive pricing dynamics in a research note today. But the AI optimism, if it pans out, could drive HPQ price significantly up in the coming year, it added.
Note that HP Inc reported a 1.7% year-on-year increase in its revenue to $14.1 billion in the fourth quarter which did surpass the consensus estimate of $13.99 billion.
The PC maker earned 93 cents on a per-share basis in its recently concluded quarter which was also in line with Street expectations.
The post HP CEO explains what Trump tariffs may mean for the PC maker appeared first on Invezz
