HP Inc.

The stable outlook reflects our expectation for revenue growth and EBITDA margin expansion in fiscal 2021. We expect S&P Global Ratings-adjusted leverage will rise to the low- to mid-1x area from below 1x as HP executes its capital return plan over the next 12-24 months. We could consider a downgrade if: HP's operating performance is meaningfully worse than expected and higher competition in printing, including disruption from business model changes, sustains market share losses or weakens profitability such that adjusted leverage exceeds 2x on a sustained basis; or The company pursues meaningful acquisitions or implements debt-financed shareholder returns such that adjusted leverage exceeds 2x. An upgrade is unlikely over the next two years due to mature PC markets and the

...While the sustainability of recent strong growth for PCs and printers longer term remain uncertain as trends in remote work and learning environments subside, we expect healthy industry unit growth in 2021. This should support our expectations for HP Inc.'s revenue growth in the mid-single-digit percents and free operating cash flow (FOCF) of $4 billion-$4.2 billion in fiscal 2021. Additionally, supply chain shortages will constrain unit growth, though we expect favorable near-term pricing will help adjusted EBITDA margins at the higher end of the 8%-9% historical range. We forecast global PC units to increase about 8% in 2021. The company's near-term backlog and demand remain high, especially for notebooks. We expect overall printer units to increase about 4%, in part driven by at-home printing demand and some inventory replenishment. Gradual improvements recently reversed printing segment revenue declines and profit pressures when HP implemented new subscription sales strategies to help...

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