Company Reports

We raise our fair value estimate for no-moat Hewlett Packard Enterprise to $17 per share from $16 after positive fiscal second-quarter results. Management raised its fiscal year guidance, and we now account for stronger growth from servers serving generative artificial intelligence applications over the medium term. The firm’s rising AI server sales mirror peers like Dell and Super Micro. We expect stronger growth here, but we don’t believe it will change the commodity-like nature of HPE’s server business or its no-moat rating. We also view AI servers as dilutive to HPE’s margin. Shares shot up as much as 15% after hours on positive AI results and the guidance raise, but we view the reaction as overexuberant. We see shares as overvalued.

Hewlett Packard Enterprise, or HPE, is a comprehensive IT hardware provider to large enterprises, supplying compute servers, storage arrays, and networking equipment. We don’t view HPE as a technology leader, nor do we see it as holding competitive advantages compared with peers. Nonetheless, HPE is a top-5 player across its core markets, and we expect it to maintain demand as data centers utilize hyperconverged infrastructure and enterprises opt for hybrid cloud approaches. We also believe investors may find its cash generation and subsequent returns to shareholders attractive.

Hewlett Packard Enterprise, or HPE, is a comprehensive IT hardware provider to large enterprises, supplying compute servers, storage arrays, and networking equipment. We don’t view HPE as a technology leader, nor do we see it as holding competitive advantages compared with peers. Nonetheless, HPE is a top-5 player across its core markets, and we expect it to maintain demand as data centers utilize hyperconverged infrastructure and enterprises opt for hybrid cloud approaches. We also believe investors may find its cash generation and subsequent returns to shareholders attractive.

We maintain our $16 fair value estimate for shares of Hewlett Packard Enterprise after it reported weak fiscal first-quarter results, but we maintain our long-term thesis. HPE’s main end markets continue to be plagued by weaker demand. Once the bright spot of networking, it is softening now, which matches what peers like Cisco are seeing in the campus market where HPE largely plays. We expect networking softness to weigh on HPE’s profitability through fiscal 2024. Management is guiding for more weakness next quarter, but for a much better second half of the fiscal year, largely driven by improving growth for GPU servers for artificial intelligence applications. Shares dipped 4% on weaker near-term guidance and we see the stock as fairly valued.

We maintain our $16 per share fair value estimate for Hewlett Packard Enterprise after the firm announced an agreement to acquire Juniper Networks. The deal values Juniper at almost $14 billion and would be the largest-ever acquisition for HPE. We like that HPE is investing in and focusing on its networking business, which we view as more differentiated and profitable than its other segments. Nevertheless, we don’t foresee the deal carving out an economic moat for the firm, nor do we see it as value-accretive. HPE’s pro forma networking business will still be a minority of sales, with commoditylike servers and storage taking up a larger portion of the mix. We believe that both HPE and Juniper lag wide-moat networking leaders like Cisco Systems and Arista Networks in technology, customer relationships, and market share. The market appears to see the deal moderately negatively—shares dipped 8% earlier in the week when rumors first broke. We see the stock as fairly valued.

We maintain our $16 fair value estimate for shares of no-moat Hewlett Packard Enterprise after its fiscal fourth-quarter results met our expectations. HPE is guiding for more tepid performance in the January quarter, but for a strong ramp of artificial intelligence, or AI, sales throughout the fiscal year. Overall, we see varying demand across the firm’s end markets. Servers and storage continue to see softer spending from customers digesting orders they already have on hand. Networking has done tremendously well over the past five quarters, but looks like it may be coming up on a demand hangover, similar to peers. Supercomputing and AI server sales look ready for an extended period of strong demand. Still, we view growth guidance for fiscal 2024 as positive in light of the mixed demand backdrop. We see shares as fairly valued.

Hewlett Packard Enterprise, or HPE, is a comprehensive IT hardware provider to large enterprises, supplying compute servers, storage arrays, and networking equipment. We don’t view HPE as a technology leader, nor do we see it as holding competitive advantages compared with peers. Nonetheless, HPE is a top-5 player across its core markets, and we expect it to maintain demand as data centers utilize hyperconverged infrastructure and enterprises opt for hybrid cloud approaches. We also believe investors may find its cash generation and subsequent returns to shareholders attractive.

We maintain our $16 fair value estimate for shares of no-moat HP Enterprise following its 2023 analyst day. The firm put forth positive long-term targets but weaker short-term guidance than we expected. The theme of the event was a focus on increasing its total addressable market in edge & networking, hybrid cloud, and artificial intelligence segments through organic and inorganic opportunities. It asserted its focus on HPE GreenLake as a key driver of gross margin expansion as well as strong annual recurring revenue growth. The firm cited challenges in the next year, however, and provided a conservative 2024 outlook. Despite shares falling on the weak guide, we maintain our long-term forecasts and view shares as fairly valued.

We maintain our $16 fair value estimate for shares of no-moat HP Enterprise, or HPE, after the firm’s fiscal third-quarter results met guidance and the outlook for the fourth quarter met our expectations. HPE continues to enjoy robust networking demand, and is garnering artificial intelligence-related orders for its supercomputers. Standard compute servers (not for AI) and storage arrays are seeing softer demand with customers still working down their own inventories, but we retain a positive view on HPE’s profitability even amid weaker demand. We see shares as fairly valued.

We maintain our $16 per share fair value estimate for Hewlett Packard Enterprise after it reported mixed, but solid fiscal second-quarter results. HPE’s sales missed our expectations and it lowered its full fiscal year sales guidance, but earnings met our expectations and it raised its bottom line guide for the full year. The firm’s networking business continues to buoy results throughout the income statement, while the server and storage businesses are acting as anchors on growth. We think an 8% drop afterhours is an overreaction to demand headwinds, particularly in servers, that we see as transient and cyclical. Nevertheless, we would recommend investors wait for a greater margin of safety to buy shares of no-moat HPE.

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.

Hewlett Packard Enterprise, or HPE, is a comprehensive IT hardware provider to large enterprises, supplying compute servers, storage arrays, and networking equipment. We don’t view HPE as a technology leader, nor do we see it as holding competitive advantages compared with peers. Nonetheless, HPE is a top-5 player across its core markets, and we expect it to maintain demand as data centers utilize hyperconverged infrastructure and enterprises opt for hybrid cloud approaches. We also believe investors may find its cash generation and subsequent returns to shareholders attractive.

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.

Hewlett Packard Enterprise, or HPE, is a comprehensive IT hardware provider to large enterprises, supplying compute servers, storage arrays, and networking equipment. We don’t view HPE as a technology leader, nor do we see it as holding competitive advantages compared with peers. Nonetheless, HPE is a top-5 player across its core markets, and we expect it to maintain demand as data centers utilize hyperconverged infrastructure and enterprises opt for hybrid cloud approaches. We also believe investors may find its cash generation and subsequent returns to shareholders attractive.

We maintain our $14 fair value estimate for Hewlett Packard Enterprise following its 2022 analyst day. It reaffirmed its focus on HPE GreenLake, software, services, and recurring revenue, and a commitment to expand profitability and cash flow. We agree with the firm’s pivot into an as-a-Service, or aaS, model, but continue to retain mild skepticism about some of its targets, particularly against the near-term market backdrop, which we view as challenging. Still, we maintain our long-term forecasts, and note these imply growth rates in line with management’s updated model. We view shares as fairly valued for the no-moat company.

Hewlett Packard Enterprise, or HPE, is a comprehensive IT hardware provider to large enterprises, supplying compute servers, storage arrays, and networking equipment. We don’t view HPE as a technology leader, nor do we see it as holding competitive advantages compared with peers. Nonetheless, HPE is a top-5 player across its core markets, and we expect it to maintain demand as data centers utilize hyperconverged infrastructure and enterprises opt for hybrid cloud approaches. We also believe investors may find its cash generation and subsequent returns to shareholders attractive.

Hewlett Packard Enterprise, or HPE, is a comprehensive IT hardware provider to large enterprises, supplying compute servers, storage arrays, and networking equipment. We don’t view HPE as a technology leader, nor do we see it as holding competitive advantages compared with peers. Nonetheless, HPE is a top-5 player across its core markets, and we expect it to maintain demand as data centers utilize hyperconverged infrastructure and enterprises opt for hybrid cloud approaches. We also believe investors may find its cash generation and subsequent returns to shareholders attractive.

We maintain our $14 fair value estimate for no-moat Hewlett Packard Enterprise after the company posted fiscal third-quarter results in line with our expectations and upheld its guidance for the fiscal year. HPE is continuing to post solid results amid foreign exchange headwinds hampering top-line growth and supply constraints weighing on profitability. We see signs of demand tapering and coming back in line with supply, but the firm’s high backlog levels give us confidence in near-term results, and its commentary was markedly rosier than rival Dell’s a week ago. Still, we expect cyclicality for Hewlett Packard Enterprise, which underlies our no-moat rating. Shares rose lightly on positive guidance, and we view them as fairly valued.

Hewlett Packard Enterprise is a leading supplier of IT infrastructure products and services. It generates revenue from selling servers, storage, and networking equipment, as well as the associated software. HPE also has a financial services arm it uses to provide financing to customers. HPE is committed to make its entire portfolio available as-a-service by 2022, and we believe HPE is wisely focusing on profitability and shareholder returns.

We maintain our $14 fair value estimate for no-moat Hewlett Packard Enterprise after the company reported its second-quarter results. Revenue landed slightly below our expectations, caused by the conjunction of currency headwinds, COVID-19 shutdowns in China, and the ceasing of all business in Russia, all leading to an estimated $250 million impact on the top line. The quarter had its bright spots as well, with its as-a-service model orders up 107% year over year and annualized revenue run-rate increasing 25% year over year despite ongoing supply constraints. Its flagship as-a-service offering, HPE GreenLake, converged with its networking business, Aruba, to offer the flexible cloud model to a much broader customer base. Shares are down 7% to $14.75 in afterhours trading, and we view shares as fairly valued.