H-P Identifies New Growth Areas - Analyst Blog

The world's largest computer manufacturer Hewlett-Packard Company (HPQ) has won a $30.0 million deal from Texas Health and Human Services Commission. As per the terms of the agreement, the technology major will create a state-wide Medicaid health information exchange.

This is a 52-month contract, which includes the replacement of the paper-based Medicaid identification cards with plastic magnetic stripe cards for automated eligibility verification.

The agreement further specifies that HP has to provide web-based tools in order to increase access to health information. The newly designed system along with process enhancements will help the organization to improve prescription services, thereby enhancing access to health information.

Hewlett Packard is trying to grow its health care business inline with Dell Inc. (DELL), as it offers a good growth opportunity. Electronic Medical Records (EMR) is the sector the company is trying to penetrate of late. Electronic Medical Records help doctors and hospitals organize patients' medical records in a manner that makes their tracking from anywhere in the world convenient. The method also removes the hassle of storing hard copies.

The company is trying to develop new products, which will cater to most of the players in this market.  We think this is an ideal time to enter the market, as the federal government is providing enough grants to medical practitioners and hospitals for buying and using electronic record keeping software.

We believe this could be a lucrative business for companies in the technology sector, as around 10% of American health care providers have adopted a full fledged Electronic Medical Record system.

This apart, the company is also exploring the retail sector and introduced new products for retailers. The HP Imaging Barcode Scanner, which reads 1-D and 2-D barcodes printed or displayed on mobile devices, and captures images is a case in point.

Moreover, the company also introduced independent software vendor (ISV) programs for large retailers in association with industry-leading software companies, the enterprise digital signage and interactive in-store media markets.

Hewlett-Packard is expected to benefit substantially from the revival in the U.S. economy, supported by the company's market position and its compelling product line. On the other hand, we remain cautious about future growth, especially on the consumer side. We continue to believe in the growth story of the company, as it retained the leadership position in the personal computer market during the fourth quarter.

The company has a Zacks #3 Rank (short-term Hold recommendation).


 
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