Morgan Stanley Sees a ‘Very Difficult’ Holiday Season for Consumer Hardware By Investing.com

By Sam Boughedda

Morgan Stanley analysts told investors in a note Friday that the firm’s latest survey points to a “very difficult” holiday season for consumer hardware.

They explained that while their end of October AlphaWise Consumer Pulse Survey shows sentiment has largely stabilized, “consumer hardware/PC read-throughs are worsening.”

“Our October 28 – October 31 AlphaWise Consumer Survey shows that while the percentage of mid-to-high-income earners expecting their household financial situation to improve over the next 6 months upticked this month, lower income brackets are increasingly more cautious on their household financial situation,” wrote the analysts.

They added that next month’s purchasing intentions were upticked across nearly every income bracket, but this should be expected as we are heading into the holidays.

“What’s most eye-catching about this latest survey is that ~3x more respondents expect to spend less (than more) on consumer electronics & PC’s this holiday season vs. last year, with 70%+ waiting for discounts. Not only that, consumer hardware net spending intentions over a slightly longer period – the next 6 months – just hit a new survey-low at -33%. This pullback in consumer hardware and PC spending not only aligns with the cautious commentary we’ve heard throughout September quarter earnings season, but has worsened since quarter end, which should put incremental downward pressure on consumer hardware estimates,” the analysts warned.

As a result, Morgan Stanley believes it supports its Underweight rating on consumer-centric names like Cricut Inc (NASDAQ:), Logitech (NASDAQ:), and HP Inc. (NYSE:).