HP's (HPQ) fiscal Q2 was better-than-feared, but several uncertainties, including the elasticity response to higher prices, remain, Morgan Stanley analysts said in a Thursday note.

Analysts said the decline in personal computer unit sales is expected to accelerate in calendar Q2 and the second half of the year. They noted that PC margins are also expected to contract.

Morgan Stanley said that the upcoming pricing regime is "entirely uncharted," noting that when combined with an acceleration of enterprise customer purchases in the first half of the year and consumer demand already getting softer, there is a greater risk of Personal Systems underperformance.

Morgan Stanley raised HP's 2026 earnings per share estimate to $2.94 from $2.60, and its 2027 estimate to $2.65 from $2.37.

Analysts retained an underweight rating on the stock, but raised its price target to $19 from $17.

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