The new HP (HPQ 1.18%) can't seem to catch a break with analysts. The 20 who regularly follow HP have a price target of just $15 -- its stock closed at $14.63 a share on Sept. 8 -- and a middling "hold" rating. The reason for the relatively negative view of HP is nothing new: a dying PC market has all but clinched its fate.

Toss in the pressure the printer market is feeling and analysts' collective bearish sentiment seems warranted. But before investors cross HP off their stock watchlists, CEO Dion Weisler's strategy to drive growth during difficult market conditions is taking hold. That may seem counterintuitive given HP's PC-driven business, but it's delivering results that have either gone unnoticed or been ignored.

Image source: HP.

The PC isn't dead, it's evolving

When Gartner released its Q2 PC sales results, the headlines generally read "PC shipments decline 5.2% in Q2," or something similar bemoaning the rough market. But after further review, HP not only held its own, but it's actually thriving.

Though HP's year-over-year worldwide PC sales growth was just under 2% in Q2, its 19.1% market share places it only a sliver behind China-based Lenovo's 20.5% for the biggest player on the planet. The gap between the two PC giants was 2.1 percentage points last year. The impetus for HP's strong calendar Q2 PC sales may come as a bit of a surprise.

The commercial piece of HP's personal systems unit declined 3% in its recently announced fiscal 2016 third quarter. But the division's $7.51 billion was flat overall compared to 2015 thanks to HP's impressive 8% jump in consumer PC revenue. Total PC unit results climbed 4%, led by a whopping 12% jump in notebook sales. All in all, not a bad quarter given its market is "dying."

How'd they do that?

Weisler hasn't given up on PCs, he's implemented a strategic plan to drive sales via HP's focus on niche markets, including gaming and lightweight, powerful notebooks. The recent release of HP's high-resolution graphics and virtual reality (VR)-ready OMEN PC and notebook are ideal examples.

Virtual reality is expected to surge in the coming years and become a $30 billion market by 2020, and gaming will lead the initial charge. The world's gamers have been clamoring for a VR experience to immerse themselves even further into a virtual world. Problem is, as of the end of 2015, less than 1% of the world's PCs had the processing power to utilize the "next great thing."

Enter HP and its new ultra-def graphics, increased processing power, and a notebook still light enough to go anywhere. Yes, the PC market is more challenging than it was. But, no, it's not dead and HP's concerted efforts to tackle niche markets will continue to generate market share.

A few more tidbits

HP's plans to turn around its printing division poses more of a challenge than its already-in-force PC strategy. To turn the printing tide, Weisler is focused on high-end enterprise printers, including 3D printing. Commercial printing unit sales were down a mere 2% last quarter, though consumer units dropped a painful 14%. Not only will higher-end printer sales, be they 3D or not, pad margins, but the associated services and supply revenue will boost that struggling portion of the division, too.

Despite reporting a 4% drop in total revenue last quarter to $11.9 billion, HP's earnings from continuing operations climbed $110 million compared to 2015. The reason? Weisler is delivering on another HP initiative: cutting overhead. Costs and expenses dropped $580 million in fiscal Q3, down nearly 6% compared to a year ago. Total costs are down $3.23 billion in the first nine months of fiscal 2016.

Finally, HP pays its shareholders one of the industry's best dividend yields, at 3.5%, and its stock is trading at just nine times future earnings thanks to analysts' bearish perspective. But it's Wall Street's negativity that is partially to thank for making HP a sound growth and income alternative for investors with patience.