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HP Inc: it will be much more difficult to grow further

Hewlett-Packard, stock, HP Inc: it will be much more difficult to grow further

The increased demand for computers and other devices lasts much longer than predicted, thanks to which HP Inc's business continues to grow at a rapid pace. Despite the spring drawdown, at the moment the company's shares are trading 24% higher than at the beginning of the year. After the correction, HPQ looks much more attractive: the P/E ratio is 8.5, and the yield has reached 2.6%, but the risks of further price falls remain.

The sale did not happen out of the blue: investors reacted to very real risks. First of all, this is the effect of a high base: it will be much more difficult to demonstrate such high growth rates in annual terms in the following quarters. Perhaps, after the opening of offices, the demand for printers and other equipment will increase, but this will clearly not be enough to maintain the current dynamics.

It is also worth noting the fact that people do not purchase computers and office equipment once a year, which means that the increase in sales in 2020 should have occurred to the detriment of the results in 2021-2022. If these guesses are correct, it turns out that HP Inc is at its peak.

Let's not forget about the general problem of the industry - the shortage of chips: the increase in the cost of production will be shifted to end users, which can reduce their interest.

According to the results of the second quarter of 2021, revenue increased by 27% Y/Y, to $10.6 billion. Sales of laptops increased by 47%, and printers by 28%.

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