HP (HPQ)

Underperform Recap: Q1 FY26

Q1 Revenue $14.4B +7% YoY With Non-GAAP EPS $0.81 at Top of $0.73-$0.81 Guide and AIPC Reaching >35% of Mix (Up From 30% in Q4); BUT CEO Transition Dominates the Print — Enrique Lores Out After 36 Years; Bruce Broussard Interim CEO; CEO Search Underway; Memory Cost Now 35% of PC Bill of Materials (Up From 15-18% at Q4 FY25 Print) and Doubling Sequentially Q4 to Q1; PS Operating Margin 5% Within Range BUT Guided Below 5-7% Long-Term Range for Remainder of FY26; FY26 EPS Now Expected Toward LOWER END of $2.90-$3.20; Investor Day Postponed Until New CEO Named; PC Unit TAM CY26 Now Expected to Decline Double-Digits — Maintaining Underperform

Underperform Recap: Q4 FY25

Q4 EPS $0.93 Above Midpoint of $0.87-$0.97 Guide; FY25 EPS $3.10 in Line With Revised Guide; But FY26 Outlook Worsens Materially: EPS Guide $2.90-$3.20 (Essentially Flat to Down vs FY25's $3.10) Absorbs $0.30 Net Memory Cost Headwind in H2 FY26; PS Operating Margin Guided Below 5-7% Long-Term Range for Full Year; New $1B AI-Driven Cost Program Over 3 Years With 4,000-6,000 Workforce Reductions; Memory Now 15-18% of PC Bill of Materials Rising Sharply; Investor Day April 23, 2026; Dividend Raised 13% to $0.30 — 10th Consecutive Annual Increase — Downgrading to Underperform From Hold

Hold Recap: Q3 FY25

Recovery Quarter: Revenue +3% YoY With PS +6% Above Expectations on AIPC + Win 11 Refresh; Non-GAAP EPS $0.75 Slightly Above Midpoint of $0.68-$0.80 Guide (+6% Sequentially); PS Operating Margin 5.4% Back in 5-7% Long-Term Range; Tariff Mitigation Largely Working — Majority of Tariff Cost Offset in Quarter; AIPC Penetration >25% a Quarter Ahead of Plan, ISV Ecosystem Growing Double-Digit Sequentially; Print Op Margin 17.3% Solidly in 16-19% Range; Q4 Guide $0.87-$0.97 EPS Midpoint $0.92; Investor Day Announced for Early 2026; $400M+ Returned in Q3 — Maintaining Hold

Hold Recap: Q2 FY25

Revenue +3% Nominal / +5% Constant Currency on Continued Commercial PC Strength (PS +8% CC), But Tariff Costs Drove ~100bp Hit to Non-GAAP Operating Margin and ~$0.12 EPS Drag; PS Operating Margin 4.5% Below 5-7% Long-Term Range; FY25 Non-GAAP EPS Guide Cut to $3.00-$3.30 (From $3.45-$3.75); Supply Chain Pivot Accelerated — Almost No US-Bound Products From China by June (vs. Prior September Target); $2B+ Future-Ready Savings Target Raised; AIPC + Windows 11 Refresh Remain Catalysts but Print Down 3% CC With Continued Office Softness — Initiating Coverage at Hold