HPE presents 'prudent' targets as it continues to gain market share: analysts

[Hewlett-Packard corporation office building in Mississauga, Ontario, Canada]
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Hewlett Packard Enterprise (NYSE:HPE [https://seekingalpha.com/symbol/HPE]) outlined a path to grow market share across servers, storage and networking during its Securities Analyst Meeting [https://seekingalpha.com/article/4830299-hewlett-packard-enterprise-company-hpe-shareholder-analyst-call-slideshow] on Wednesday, but "prudent" growth targets prompted the stock to fall 8% by Thursday morning market action.

Financial firms offered varied reactions to the meeting and outlook.

"Ultimately, HPE focused investors toward a return of capital," said KeyBanc analysts Brandon Nispel and Matt Sbriglio in an investor note. "As we take a step back and compare the strategic focus we saw from Arista Networks (ANET [https://seekingalpha.com/symbol/ANET]) and Dell's (DELL [https://seekingalpha.com/symbol/DELL]) recent analyst days, we think ANET has a more defined strategy to grow its networking business in the Data Center, Enterprise, and Campus, and DELL has a more refined strategy to grow its AI Server/Storage business. From our perspective, the HPE narrative was a less convincing ability to execute in both these key AI verticals."

KeyBanc maintained its Sector Weight rating on the stock. They lowered their full-year fiscal 2026 revenue estimate to $40.46B from $41.42B.

Susquehanna reiterated its Neutral rating and $21 price target following the meeting.

"HPE guided FY26 EPS below our estimates, reflecting lower growth and margin dilution from the Juniper acquisition," said Susquehanna analysts, led by Mehdi Hosseini, in a note. "Looking ahead, the company outlined a clear path to generating >$3.00 in EPS by FY28, contingent on its ability to increase market share within the 'Sovereign' Al projects while also expanding Networking OM to 25-28% range as cost synergies materialize. While L-T target is encouraging, we view it as ambitious given the fierce competitive landscape in DC switching and thus maintain Neutral rating."

However, Citi reiterated its Buy rating and $28 price target. They also said the price drop creates a buying opportunity on the stock.

"We believe guide comes from an abundance of prudence, evident in its low-to-mid single-digit outlook for networking (vs industry 9% CAGR)," said Citi analyst Asiya Merchant, in a Thursday note. "Management noted the combined networking business is heavily skewed towards slower-growing campus/branch, resulting in segment growth likely to remain modest near-term until the gradual shift towards faster-growing areas like DC switching."

Evercore ISI also maintained its Outperform rating and $28 price target.

"HPE plans to take share across servers, storage and networking by leaning into areas where it already has momentum," said Evercore analysts, led by Amit Daryanani. "In networking, HPE +Juniper hold roughly ~18% share in campus and branch, and the company aims to expand globally, particularly outside the U.S. where disruption among Chinese vendors is creating openings. In storage, HPE expects to continue gaining share from a current 10–11% base. In servers, it will prioritize profitable share rather than unit growth through higher average unit pricing and services attach."

MORE ON HEWLETT PACKARD ENTERPRISE

* Hewlett Packard Enterprise Company (HPE) Shareholder/Analyst Call - Slideshow [https://seekingalpha.com/article/4830299-hewlett-packard-enterprise-company-hpe-shareholder-analyst-call-slideshow]
* Hewlett Packard Enterprise Company (HPE) Shareholder/Analyst Call Transcript [https://seekingalpha.com/article/4830238-hewlett-packard-enterprise-company-hpe-shareholder-analyst-call-transcript]
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