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HP Inc (NYSE:HPQ) is expected to report a solid fiscal second quarter later this month, though Bank of America analysts say investors are likely to focus more closely on the company’s outlook for fiscal 2026 amid concerns over PC demand, rising memory costs and leadership uncertainty.

Bank of America maintained its ‘Underperform’ rating and $16 price target on the stock ahead of the report. Shares of HP traded at $21 on Thursday afternoon.

The brokerage said second-quarter results should come in near the low end of management’s guidance range, but warned that HP may lower its full-year outlook.

“We expect results near the low-end of the guidance range and for HPQ to likely lower fiscal year 2026 guidance given the ongoing CEO search, memory pricing, and PC dynamics,” the analysts wrote.

Bank of America expects HP to reduce its fiscal 2026 earnings-per-share guidance to a range of $2.60 to $3, down from the company’s prior forecast of $2.90 to $3.20.

The firm also expects free cash flow guidance to be lowered to between $2.6 billion and $2.8 billion, compared with prior guidance of $2.8 billion to $3 billion.

The analysts said industry data suggests PC demand has remained strong so far this year, helped in part by customers accelerating purchases ahead of potential price increases. However, they noted that HP appears to have lost market share during the period.

“Industry data and commentary suggests PC demand has remained strong year-to-date, likely helped by pull-forward, but preliminary data indicates HPQ lost share,” the note said.

According to the report, HP lost 360 basis points of market share in the US during the calendar first quarter, with unit shipments falling 22% year-over-year. Globally, HP reportedly lost 150 basis points of share as unit shipments declined 5%, while overall industry unit growth rose 3%.

Bank of America said it expects HP’s Personal Systems segment revenue to rise 10% year-over-year in the fiscal second quarter, though margins are likely to remain under pressure from higher memory costs. The firm forecasts operating margins for the segment at 4.3%, down 73 basis points sequentially.

The analysts added that they see fiscal 2026 Personal Systems revenue growth being driven primarily by pricing rather than unit expansion.

“The bigger debate, in our view, is whether strong double digit percentage OEM price increases set up a backdrop of demand destruction in H2 calendar year 2026,” they wrote.

On the Print business, Bank of America said second-quarter margins should remain relatively strong and broadly in line with management’s guidance. The brokerage forecasts Print operating margins of 18.7% for the quarter and 18.4% for fiscal 2026.

However, the analysts expect margins in the fiscal third quarter to weaken due to a greater mix of hardware sales.

“While Print can support operating margins near-term, it is not enough to offset weaker incremental setup in PCs,” they wrote.

Bank of America left its fiscal 2026 revenue and earnings estimates unchanged and maintained its $16 price objective, based on six times projected calendar 2027 earnings per share of $2.95.

HP will report its fiscal Q2 results on May 27.