Price weakness used to buy.

HP shows good profitability with an ROTC of 41.33% and one can see a slight undervaluation with a P/S of 0.55.

As a listener to the conference call on HP's financial results ($HPQ (+0,38 %) ) for the first quarter of the 2025 financial year, I was able to get a detailed overview of the company's current situation and future plans.

Enrique Lores, CEO of HP, emphasized that the first quarter was a strong start to the year, with revenue growth and a focus on long-term success. He focused on three main areas: the first quarter results, the performance of the business units and the outlook for the coming year.

HP delivered its third consecutive quarter of year-over-year revenue growth of 2%, driven primarily by the Personal Systems and the Commercial business. Earnings per share were slightly above the mid-point of the forecast range. The profit margins for Print and Personal Systems were in line with expectations. Lores emphasized that HP is pursuing its strategy of future of work is consistently pursuing its strategy of leading the future of work.

HP is increasingly investing in the commercial sector and in new AI and software functions. One example of this is the planned acquisition of assets from Humanewhich will develop HP's AI-powered platform CosmOS and a highly skilled technical team. This acquisition is expected to accelerate the development of an intelligent ecosystem across all HP devices.

The Key Growth Areas have been realigned to focus on the future of work to reflect the focus on the future of work. The areas now include AI PCs and advanced compute solutions such as workstations and retail solutions. Gaming will remain an important business area, but will no longer be managed as a key growth area as it is not directly related to the future of work linked to the future of work.

At the CES were AI-supported innovations were presented, including new models of AI PCs. These are designed to enable experts to make decisions more quickly and collaborate effectively. In the field of gaming was OMEN AI beta was introduced, a software that automatically adjusts performance. In the industrial sector new HP PageWide presses which enable high printing speed and quality.

Sales in the Personal Systems increased by 5 % compared to the previous year, with the commercial business driving growth. HP gained market share in the PC Commercial Windows market market, but lost share in the consumer segment. The company plans to improve its performance in this segment over the course of the year. Global sales of PC Commercial increased by 10 %, partly due to the introduction of AI PCs and the Windows 11 refresh cycle.

In the Print HP recorded strong growth in unit sales and market share in the Home segmentespecially for Big Tanks. In the Office segment market shares were maintained overall and in strategic areas such as A4 Value and A3 even expanded.

HP has taken measures to respond to geopolitical developments and to increase the the resilience of production production. The supply chain has been diversified globally and production capacity has been expanded in several countries. By the end of fiscal 2025, more than 90% of HP products sold in North America will be manufactured outside of China. The company plans to structural savings of 1.9 billion US dollars by the end of the 2025 financial year.

Karen Parkhill, CFO of HP, expressed her satisfaction with the first quarter results and the progress made in achieving the financial targets for the year. Revenue increased in all regions. Gross margin decreased due to higher raw material costs. Non-GAAP operating expenses increased due to investments in strategic initiatives and employees. The non-GAAP diluted earnings per share amounted to 0.74 US dollars. HP increased the target for structural savings from USD 1.6 billion to USD 1.9 billion by the end of financial year 202512. Cash flow from operating activities amounted to 375 million US dollars, the free cash flow 70 million US dollars. For the full year 2025 non-GAAP diluted earnings per share are expected to be between 3.45 and 3.75 US dollars.

Analysts asked questions on various topics, including the impact of tariffsthe growth in the Personal Systems segment and the Windows 11 refresh wave.

HP reiterated that the known impact of the China tariffs have been taken into account in the forecast. The company plans to optimize the global supply chain to minimize the impact and relocate production sites.

HP expects the market for AI PCs will continue to grow and that the company will gain market share in this area. The Windows 11 refresh wave and the increasing spread of AI PCs are seen as important growth drivers. The company plans to expand its AI capabilities further expand its AI capabilities and invest in new technologies.

Some analysts expressed concern about the seasonality and the expected increase in profit in the second half of the year. However, HP reiterated its confidence in the forecast and pointed to an improved sales and cost situation. The company plans to continue to invest in strategic growth areas invest in strategic growth areas and efficiency increase efficiency.

In summary, HP has made a strong start to 2025 and is preparing for the future of work. future of work of work. The company is investing in AI and software innovationsdiversifying its supply chain and strives for structural savings to achieve long-term growth. Despite some challenges, such as rising raw material raw material costs and geopolitical uncertaintiesHP is confident of achieving its financial targets for the year.

The HP share ($HPQ (+0,38 %)) is on a slight upswing after the computer giant acquired the developer company Humane for 116 million dollars. 🖥️ But what is behind the takeover?

Humane, a start-up founded by former Apple managers, presented the "AI Pin" in 2023 - an AI device that was intended to replace the smartphone. The idea was promising: with a camera, loudspeaker and laser projector, the idea was to do away with the smartphone in everyday life. Unfortunately, the concept was not well received and the "AI Pins" will only work until the end of the month.

What do you think of such innovative approaches? Are they the key to the future or just another failure? 🤔 The merger could give HP new impetus, but the question remains: is the market ready for such technologies? Share your thoughts!

In the following post, I would like to discuss the new US tariffs and their potential economic consequences. The background and the potential impact on inflation and companies, as well as the winners and losers on the stock market, will be discussed.

Again, of course, the stocks mentioned do not constitute investment advice, but merely serve as examples of possible beneficiaries or losers of tightening trade restrictions. Historical developments are no guarantee of future returns.

__________

In this post:

• Influence on inflation
• New tariffs in force
• Reaction of the countries
• Consequences for the global economy
• Winners & losers
• Investment opportunities

__________

The topic of "tariffs" is currently not only very present in the media, but the term "tariffs" has also been discussed with a strong increase in the past earnings calls of companies in the S&P 500, as the following chart shows [1].

The chart shows that the discussion about tariffs has intensified in recent months and is having an ever greater impact on the outlook in companies' annual reports.

The data is presented as a three-month average and broken down into various sectors, including e.g. industry, healthcare, consumer goods, information technology, etc.

I am curious to see how the stock markets will behave in the coming week. In addition to the current reporting season, the topic of "tariffs" will certainly dominate.

After the tough tariffs announced after Trump took office were not immediately enforced and there was a "slight" sigh of relief, there could now be a new reaction on the markets, as there was on Friday evening. slightly was already slightly noticeable on Friday evening when the markets turned towards the evening.

A looming trade conflict could not only affect individual companies, but also further fuel inflation in the US:

💰 Influence on inflation

On January 31, Deutsche Bank published a forecast on the potential impact of tariffs on the inflation rate [2]:

The chart compares the current forecast with the forecast before the "Trump" era and takes into account various scenarios for the passing on of tariffs (pass-through) by Canada and Mexico.

Two scenarios are considered: one with a 50% pass-through of tariffs (additional increase shown in dark green) and one with a 75% pass-through (light green). It is clear that the inflation rate could rise sharply again this year and fall again by 2027.

🛃 New tariffs in force & further measures planned

As of today, February 1, 2025, the US government and Donald Trump have imposed new import tariffs on Mexico, Canada and China:

• 25% on imports from Mexico and Canada
• 10% on imports from China

According to the White House spokesperson, these measures are, among other things, a response to the failure of these countries to stop the influx of fentanyl and illegal immigrants into the USA. [3]

But this is just the beginning:

From mid-February, the USA will also impose tariffs on strategic goods [4], including:

• computer chips
• pharmaceuticals
• Steel, aluminum and copper
• Oil and gas imports (but only from February 18 with reduced 10% tariffs so as not to burden US petrol prices immediately).

🚨 Trump relies on escalation - Canada announces retaliation

Yesterday, Canadian government representatives, including Foreign Minister Mélanie Joly, tried to prevent the tariffs in Washington, but to no avail.

Trump made it clear before his departure to Mar-a-Lago [5]:

"We have a 200 billion dollar trade deficit with Canada. Why should we subsidize Canada?"

The EU could also soon be targeted, as Trump hinted:

"Absolutely! The European Union has treated us so terribly!"

🔄 Canada's reaction:

Prime Minister Justin Trudeau announced that Canada will not back down and will respond with "swift and robust countermeasures".

The government is planning a three-stage retaliation strategy [5]:

• 1️⃣ Targeted punitive tariffs on US products coming from Republican states (e.g. orange juice, whiskey, ketchup, peanut butter and motorcycles).

• 2️⃣ Tariffs on steel products and machine parts from the USA.

• 3️⃣ Escalation: Stop exports of oil, gas and electricity to the USA

However, this last step in particular would be a double-edged sword, as Canada is heavily dependent on energy cooperation with the USA.

Economic experts in the US are already warning of the consequences of a trade war [5]:

• The new tariffs could increase the cost of living of an average US household by 800 dollars per year.
• The oil and gas tariffs could increase the price of petrol in the USA by up to 20 cents per liter.

But Trump remains firm:

"Maybe there will be short-term disruption, but in the long run the tariffs will make us very rich and very strong."

🌎 Possible consequences for the global economy

(a) Rising prices in the USA

• Technology & electronicsHigher chip prices are hitting companies such as Apple $AAPL (-0,56 %) , Dell $DELL and HP $HPQ (+0,38 %) as many of their components come from China.

• Healthcare costs: Pharmaceutical companies such as CVS Health $CVS (+2,03 %) and Walgreens Boots Alliance $WBA (+0 %) are facing higher purchasing costs.

• Construction & InfrastructureHigher steel prices are weighing on companies such as Lennar $LEN (-0,34 %) D.R. Horton $DHI (-1,26 %) and Caterpillar $CAT (+2,59 %) .

(b) Retaliation & new trade wars?

• China could impose tariffs on US products, which could affect e.g. Archer Daniels Midland $ADM (+1,05 %) Boeing $BA (+1,47 %) and Qualcomm $QCOM (+0,72 %) would be affected.

• The EU could make US imports more expensive, which would affect Tesla $TSLA (-0,58 %) , Ford $F (+0,89 %) and General Motors $GM (+1,3 %) could be harmed.

(c) Effects on the stock market

• Volatility is increasing as there is uncertainty about the consequences for various industries.

• Particularly affected: Technology and automotive stocks with global supply chains.

🏆 Winners & losers - which companies will benefit, which will suffer?

Possible beneficiaries of the tariffs

US manufacturers of steel, aluminum & copper

• Nucor $NUE (+1,21 %) , U.S. Steel $X and Freeport-McMoRan $FCX (+7,23 %) could benefit as foreign competition becomes more expensive as a result of the tariffs.

Domestic pharmaceutical and biotech companies

• Pfizer $PFE (-0,43 %) Moderna $MRNA (+2,52 %) and Eli Lilly $LLY (-0,32 %) could gain market share.

Energy companies with US production

• ExxonMobil $XOM (+1,14 %) , Chevron$CVX (+0,39 %) and Expand Energy $CHK (-0,64 %) could benefit from rising prices for US oil and gas.

Chip manufacturers with US production

• Intel $INTC (+0,58 %) and Texas Instruments$TXN (+1,07 %) have US factories and could gain market share.

😥 Companies that could suffer from the tariffs

Chip manufacturers with global supply chains

• Apple $AAPL (-0,56 %) NVIDIA $NVDA (-0,17 %) , AMD $AMD (-0,55 %) are dependent on Asian imports and could see higher production costs.

Car manufacturers with global suppliers

• Tesla $TSLA (-0,58 %) , Ford $F (+0,89 %) , General Motors $GM (+1,3 %) are under pressure because components from Mexico and Canada could become more expensive.

Companies with strong export business

• Boeing $BA (+1,47 %) and Caterpillar $CAT (+2,59 %) suffer from possible retaliatory tariffs.

US retailers with a high import share

• Walmart $WMT (-1,45 %) , Target $TGT (+0,23 %) and Nike $NKE (+0,55 %) could have to pass on rising prices to customers.

🧠 Possible investment strategies

Favor defensive sectors:

• Utilities (e.g. NextEra Energy $NEE (+1,01 %) Duke Energy $DUK (-0,2 %) ) and healthcare companies (e.g. UnitedHealth $UNH (-0,4 %) , Johnson & Johnson $JNJ (-0,57 %) ) remain more stable.

Exploit long-term opportunities in "reshoring":

• Intel $INTC (+0,58 %) , Eli Lilly $LLY (-0,32 %) , Nucor $NUE (+1,21 %) could benefit in the long term.

Conclusion: Will the trade conflict escalate further?

With the new tariffs, Trump is taking a confrontational stance and Canada, Mexico and China are preparing for retaliatory measures. If further tariffs on European goods follow, the situation could worsen.

❓Which stocks do you think could be most affected? Which beneficiaries do you see?

Thanks for reading! 🤝

__________

Sources:

[1] https://finance.yahoo.com/news/yahoo-finance-chartbook-44-charts-that-tell-the-story-of-markets-and-the-economy-to-start-2025-105856766.html

[2] https://finance.yahoo.com/news/2-charts-show-why-markets-are-skittish-about-trumps-tariff-policy-144318249.html

[3] https://www.faz.net/aktuell/politik/usa-unter-trump/trumps-verhaengt-zoelle-gegen-kanada-mexiko-und-china-110269990.html?

[4]

https://www.finanznachrichten.de/nachrichten-2025-01/64440108-trump-usa-werden-ab-mitte-februar-zoelle-auf-computerchips-stahl-sowie-oel-und-gasimporte-erheben-015.htm

[5] https://www.tagesschau.de/ausland/amerika/usa-trump-strafzoelle-100.html

⬆️⬆️⬆️

- GOLDMAN raises the price target for DELL from USD 155 to USD 165. Buy. $DELL (+4,04 %)

- GOLDMAN raises the price target for ANALOG DEVICES from USD 247 to USD 261. Buy. $ADI (+0,77 %)

- GOLDMAN raises the price target for HP INC from USD 35 to USD 38. Neutral. $HPQ (+0,38 %)

- WARBURG RESEARCH raises the price target for VONOVIA from EUR 40.20 to EUR 42.30. Buy. $VNA (-0,07 %)

- WARBURG RESEARCH upgrades STRATEC from Hold to Buy. Target price 40 EUR. $SBS4

- DEUTSCHE BANK RESEARCH raises the price target for DEUTSCHE BÖRSE from EUR 235 to EUR 237. Buy. $DB1 (+1,84 %)

- MORGAN STANLEY raises the target price for DEUTSCHE TELEKOM from EUR 33 to EUR 38. Overweight. $DTE (-0,13 %)

- GOLDMAN raises the price target for TRATON from EUR 31.80 to EUR 35.50. Neutral. $8TRA (-3,48 %)

- GOLDMAN raises the price target for BRENNTAG from EUR 94 to EUR 95. Buy. $BNR (+2,01 %)

- BERENBERG upgrades EQUINOR from Hold to Buy and raises target price from NOK 290 to NOK 325. $EQNR (+0,35 %)

- JPMORGAN raises the target price for BEIERSDORF from EUR 150 to EUR 160. Overweight. $BEI (-0,23 %)

- JPMORGAN upgrades HENKEL from Neutral to Overweight and raises target price from EUR 82 to EUR 100. $HEN (+0,16 %)

- JPMORGAN upgrades BRITISH AMERICAN TOBACCO to Neutral. $BATS (-1,1 %)

- JPMORGAN raises the price target for EON from EUR 15.50 to EUR 16. Overweight. $EOAN (+1,61 %)

- JPMORGAN raises the target price for AUTO1 from EUR 12.10 to EUR 17.10. Overweight. $AG1 (-0,24 %)

⬇️⬇️⬇️

- STIFEL lowers the price target for SIEMENS from EUR 207 to EUR 202. Buy. $SIE (+1,11 %)

- JPMORGAN lowers the price target for HP INC from USD 41 to USD 40. Overweight. $HPQ (+0,38 %)

- WARBURG RESEARCH lowers the price target for LANXESS from EUR 40 to EUR 37. Buy. $LXS (+1,89 %)

- CITIGROUP lowers the price target for BASF from EUR 49 to EUR 46. Neutral. $BAS (+0,37 %)

- RBC lowers the target price for COMMERZBANK from EUR 18 to EUR 17.25. Sector Perform. $CBK (-0,5 %)

- RBC lowers the target price for ING from EUR 17.50 to EUR 16.75. Sector-Perform. $ING (+0,55 %)

- RBC lowers the price target for BNP PARIBAS from EUR 79 to EUR 78. Outperform. $BNP (+0,64 %)

- JPMORGAN lowers the price target for ELRINGKLINGER from EUR 6.70 to EUR 6. Neutral. $ELLRY (+22,05 %)

- JPMORGAN lowers the price target for SYMRISE from EUR 130 to EUR 120. Overweight. $SY1 (+0,25 %)

Earnings next week

$DELL (+4,04 %)

$CRWD (+1,92 %)

$ANF (+0,49 %)

$ZM (-0,27 %)

$KSS (+1,72 %)

$WDAY (+0,77 %)

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$M (+0,53 %)

$FLNC (+2,67 %)

$HPQ (+0,38 %)

$DKS (+3,75 %)

$AMBA (+5,61 %)

$URBN (+3,13 %)

$DDD (+7,56 %)

$BURL (+1,03 %)

$A (+0,33 %)

$WWD (+1,44 %)

$HDL

$IREN (+10,27 %)

$GIW

$SMTC (-0,57 %)

$JWN

$NTNX (+0,33 %)

$HSAI (+17,72 %)

$LESL (+0 %)

$PFLT (+0,46 %)

$GES (-0,49 %)

$ENTA (+0,39 %)

$ADI (+0,77 %)

$PNNT (+0,35 %)

$SUPV (-0,53 %)

$BLRX

$PD

$FRO (-1,85 %)

$NJR (+0,79 %)

$ARWR (+2,31 %)

$TWG

$MANU (-1,33 %)

$YY (+0 %)

$NOAH (-0 %)

$ICCM

$SJM (-0,07 %)

$CLGN

$UNM

$GOGL (-1,38 %)

$TITN (+4 %)