Buy HP stock as Berkshire risk has largely played out - analysts

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Buy HP stock as Berkshire risk has largely played out - analysts
Credit: © Reuters.

Berkshire Hathaway (NYSE: BRKa ) disclosed a substantial reduction in its HP (NYSE: HPQ ) ownership by selling around 45 million shares, decreasing its stake from 9.9% to 5.2%.

This continues Berkshire Hathaway's trend of reducing its HP ownership, which initially stood at approximately 12% or 121 million shares in April 2022.

The share sale comes after a solid quarter for HP, where it reiterated its fiscal year 2024 guidance but provided a softer-than-expected outlook for Q1.

HP emphasized that the demand environment in the January quarter is anticipated to remain challenging but stable.

While shares initially dipped on the headline, the stock recovered to trade in the green after Morgan Stanley analysts raised the rating to Overweight.

Moreover, analysts at Evercore ISI reflected in positively as this “headwind risk is largely behind us.”

"We think this cut is overall encouraging for our bullish view of HP,” analysts said.

“We think HP can see their EPS get towards $4.00 over the next 12-24 months (CY25 potential). Notably, we think much of this double-digit EPS CAGR will come from buybacks and OPEX controls vs. being revenue dependent.”

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