In a report released today, Asiya Merchant from Citi maintained a Hold rating on Hewlett Packard Enterprise (HPE – Research Report), with a price target of $18.00.
Asiya Merchant has given her Hold rating due to a combination of factors impacting Hewlett Packard Enterprise’s performance and outlook. Merchant’s analysis suggests that while there is growth expected in HPE’s Intelligent Edge and High Performance Computing & Artificial Intelligence (HPC & AI) segments, there are also concerns about margin pressures and a mix shift towards HPC & AI that could lead to slight degradation in overall profitability. Furthermore, while the order book has shown an increase, indicating some demand, the conversion of these orders into revenues has been limited, particularly in the HPC & AI segment.
Merchant also takes into account the company’s financial activities, noting that while share buybacks fell short this year, management has reaffirmed its targets for the next fiscal year. However, anticipated weak cash flow in the first quarter might affect the ability to execute share repurchases in the first half of the year. Additionally, despite expectations for seasonal revenue patterns and an anticipated rebound in margins for compute and storage in the first quarter, overall compute is expected to be slightly down for the fiscal year, with storage seeing only modest growth. These factors contribute to Merchant’s cautious stance on HPE, reflected in the Hold rating with an expected share price return of 16.0%.
According to TipRanks, Merchant is a 5-star analyst with an average return of 23.4% and a 66.67% success rate. Merchant covers the Technology sector, focusing on stocks such as Hewlett Packard Enterprise, HP, and NetApp.
In another report released today, Barclays also maintained a Hold rating on the stock with a $15.00 price target.
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Hewlett Packard Enterprise (HPE) Company Description:
Hewlett Packard Enterprise Co. engages in the provision of information technology, technology and enterprise products, solutions, and services. It operates through the following segments: Hybrid IT, Intelligent Edge, Financial Services, and Corporate Investments. The Hybrid IT segment provides a broad portfolio of services-led and software-enabled infrastructure and solutions. The Intelligent Edge segment comprises of enterprise networking and security solutions for businesses of any size, offering secure connectivity for campus and branch environments, operating under the Aruba brand. The Financial Services segment offers investment solutions, such as leasing, financing, information technology consumption, utility programs and asset management services. The Corporate Investments segment includes Hewlett Packard Labs and certain business incubation projects. The company was founded in 1939 and is headquartered in San Jose, CA.
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