HP Shares Drop 7% on Morgan Stanley Downgrade Amid Margin Pressure
HP Inc. (HPQ) shares fell sharply after Morgan Stanley downgraded the stock to Sell, citing rising memory chip costs that threaten profitability. Analyst Erik Woodring slashed the price target to $24, warning of 70-90 basis point margin compression despite a resilient PC refresh cycle.
The report triggered broader tech hardware declines, with Dell (DELL) and Hewlett-Packard Enterprise (HPE) also sliding. At 8x forward earnings, HP now faces valuation headwinds unless operational efficiencies materialize.
This selloff highlights growing market sensitivity to inflationary pressures in hardware supply chains. While Wall Street maintains a Moderate Buy rating, the 9% EPS cut to $2.98 for FY26 reflects tangible margin risks ahead.