We Expect Better, but Still Soft 2023 for Hewlett Packard Enterprise After Q4 Results; FVE up to $15

We raise our fair value estimate for Hewlett Packard Enterprise to $15 per share, from $14, following quarterly results and guidance that exceeded our expectations. We expect better performance in the short term, led by networking demand and backlog reduction elsewhere, but remain skeptical of management’s fiscal-year 2023 guidance that appears optimistic to us. We expect demand to sour for both servers and storage through fiscal 2023, and for the firm’s pricing in these markets to wane with deflating component costs. Nevertheless, we think the firm has the backlog in place to notch another year of low-single-digit sales growth. Shares ticked up on positive guidance, and we see the firm as fairly valued.