HP Analyst Day Displays Optimism for PC and Printing Beyond the Near Term; FVE Up to $27

We are raising our fair value estimate for no-moat HP Inc. to $27 from $25 after its 2021 analyst day provided fiscal 2022 earnings and free cash flow guidance that was higher than we expected. HP also confirmed its previously stated fiscal fourth-quarter guidance. However, we remain skeptical about the longer-term enthusiasm HP has regarding the computer and printing markets being sustainable growth areas that can provide increased operating margin dollars. While we positively view particular innovative, higher margin and growth areas like personal systems peripherals, graphics, and printing packaging, our anticipation is the surge in demand for core PC and printing solutions will begin to lull as HP works through the backlog brought on by the pandemic and supply chain constraints. In turn, we see shares as modestly overvalued.