Hewlett Packard Enterprise Opens Fiscal 2023 Strong Amid Macroeconomic Headwinds; Raise FVE to $16

We raise our fair value estimate for Hewlett Packard Enterprise, or HPE, to $16, from $15, after its first-quarter results and guidance surpassed our expectations for revenue and earnings. We were skeptical of management’s seemingly lofty expectations entering the year but are impressed with the quarterly results and full-year guidance raise. We still expect a difficult demand environment for both servers and storage throughout the remainder of fiscal 2023, but note that HPE is weathering it much better than peers like Dell. Long-term, we remain wary of cyclicality and a highly competitive landscape for HPE, underscoring our no-moat rating. Shares initially jumped 5% on the strong quarter and guidance but leveled off, and we view them as fairly valued.