Morgan Stanley cuts PC estimates again, but firm says 'bottom' is approaching
AnthonyRosenberg/iStock Unreleased via Getty Images

Investment firm Morgan Stanley cut its estimates for the PC market again, but added that a "bottom" may be approaching, which has historically been a buying opportunity for stocks in the industry.
Analyst Erik Woodring lowered his estimate to 249M shipments for 2023, down from a previous estimate of 261M, as "both consumer and commercial market weakness is prolonged by softer-than-expected demand and elevated channel inventory."
Woodring noted that a run rate of 249M PC shipments would be the lowest figure since 2006 and there is evidence that PC manufacturers are becoming "more aggressive" to discount their products in an effort to spur demand.
As a result, the firm is "tactically cautious" on both Dell Technologies (NYSE:DELL) and HP (NYSE:HPQ) going into their quarterly results next week. Woodring added that both he expects both companies to miss analyst consensus, with commentary around the rest of the year likely to be "incrementally more cautious."
A consensus of analysts expect Dell (DELL) to earn $1.65 per share on $23.56B in revenue. Conversely, HP (HPQ) is expected to earn 75 cents per share on $14.22B in revenue.
Morgan Stanley is underweight HP (HPQ) and Dell (DELL), while Apple (AAPL) is the firm's top pick in the PC maker market.
Despite the negativity surrounding the PC market, Woodring added that it's likely a "bottom" is approaching, perhaps as soon as the March quarter. That would suggest that now is the time to get positive on PC makers, but it's likely too premature to do so, as estimates "still need to be reset lower," visibility is still low and the global economy remains in flux.
"We'll be tracking the upstream PC supply chain (i.e. semis, ODMs, etc.) closely for signs that the March quarter is indeed the bottom, and if/when we gain confidence that the PC [makers] have been able to work down elevated backlog and demand trends are stabilizing, then we'd be biased to get more positive," Woodring added.
Earlier this month, Dell Technologies (DELL) said it would lay off around 6,650 employees, or roughly 5% of its workforce, due to the decline in the demand for personal computers.