HP Benefits From Strong PC Demand Environment in Q2, but We Expect a Slowdown Coming; $29 FVE

We are maintaining our $29 fair value estimate for no-moat HP after its second-quarter results came in better than we anticipated for revenue growth and earnings. We view shares, which were flat after the print, as overvalued. Although HP is strongly benefitting from record demand for PCs due to widespread remote working and schooling as well as computer refreshes as offices reopen, we believe this record demand will start to cool as PC manufacturers work through backlog. In turn, we remain cautious about HP having durable demand drivers due to skepticism regarding PCs entering a new era of lasting demand.