HP Inc. (HPQ), mcap=$39bn, price $37.1 vs. $35.8

Pitch: COVID beneficiary with expanded margins due to increased demand/pricing for home printers and notebooks. Margins to normalize to pre-covid levels due to fierce competition. Mgmt’s projections of 1% growth are unrealistic.

Valuation: Assuming currently elevated margins HPQ trades at 8.5x FY23 EBIT. Author’s base case with 4% revenue contraction, pre-COVID margins and 7xEBIT multiple results in $26/share target.

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