Weakening consumer demand for HP Inc's products and a high valuation will likely limit gains for the PC maker going forward, according to UBS. The firm on Thursday lowered its rating on HP to neutral from buy. UBS has a $40 price target on the stock, which is roughly in line with where it closed at Thursday. "We believe the risk that PC unit growth turns negative as early as the October quarter given supply chain headwinds and macro cross currents following recent checks is increasing," UBS's David Vogt said in a note Thursday. "Considering the solid share outperformance over the past 12 months ... we are stepping to the sidelines," Vogt added. HP shares are up nearly 24% over the past 12 months, outperforming the S & P 500 9.8% gain in that time. HP is also up 6.3% this year, while the S & P 500 has lost 5.6% in that time. UBS's call comes after Warren Buffett's Berkshire Hathaway revealed a major stake in HP , making it the company's largest shareholder. The news led to HP closing up 14.7% on Thursday. The move also comes after Morgan Stanley downgraded HP last week, citing uncertainty for the PC industry. UBS sees "incremental signs of softness in low-end Consumer PCs following recent checks over the past month." —CNBC's Michael Bloom contributed reporting.
Enrique Lores, CEO, HP
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Weakening consumer demand for HP Inc's products and a high valuation will likely limit gains for the PC maker going forward, according to UBS.