IDC, a market research firm, has estimated that total global PC sales will reach 531 million units by 2014 with notebooks constituting about 75%, or about 400 million notebook PCs sold. IDC’s forecast is significantly higher than our estimate of 202 million notebooks sold and suggests an upside of $5 (>9%) to the $53 Trefis price estimate for HP’s stock if HP’s market share trends as we forecast.

Below we highlight why notebook sales are expected to grow and how this can lead to a substantial upside in HP’s stock price.

Global Notebook Sales Have Been Rising Consistently

We estimate global notebooks sold to have increased from 62 million in 2005 to 148 million in 2009.

We expect increasing notebook PC shipments based on the following factors:

1. Rebound in corporate notebook purchases: Notebook sales growth in 2009 was driven primarily by consumers, while corporate purchases saw less than 1% growth. Corporate purchases did show signs of picking up in the last quarter of 2009 and we believe that there will be increasing demand from businesses in the coming quarters.

2. Emerging markets will lead future notebook sales: Emerging markets were instrumental in reviving the mobile PC (notebooks and netbooks) market in 2009. For example, PC shipments in Asia Pacific grew 44% in Q4 2009 compared to the same quarter in 2008. Similarly, Latin America saw 43% year over year growth for Q4 2009.

3. Notebook manufacturers will continue to sell at lean margins to drive unit sales.

IDC’s Forecast of Notebook Sales Can Result in 9% Upside for HP’s Stock

We estimate notebooks to constitute 12% of the $53 Trefis price estimate for HP’s stock. By increasing our forecast for global notebook PC shipments above to reach about 400 million by 2014, in line with IDC’s forecast, you can see how there would be an upside of $5 (>9%) to HP’s stock price if the company’s market share were to remain around 22% as we forecast.

For additional analysis and forecasts, here is our complete model for HP’s stock.

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