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Hewlett Packard Enterprise gains on solid earnings, guidance

Stock Markets Nov 30, 2022 09:28
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By Senad Karaahmetovic

Shares of Hewlett Packard Enterprise (NYSE:HPE) trade higher in pre-market Wednesday after the company reported better-than-expected FQ4 results and FQ123 guidance.

The company reported in-line FQ4 EPS while revenue soared by +7% and came in at $7.87 billion to top the analyst consensus of $7.37B. The beat was driven by strong demand registered in the firm’s Compute business unit, where revenue came in at $3.74B (vs $3.14B consensus).

For this quarter, HPE said it sees the adjusted EPS at $0.54 (up or down $0.04) on revenue of $7.4B (up or down $200 million), beating the consensus of $0.50 on sales of $6.99B. The company reaffirmed its previous FY23 year forecast.

“We are now entering a very different phase of the company, one where the combination of our rightsized cost structure and substantial order book is expected to deliver profitable growth that is increasingly recurring at higher margins as our as-a-service transformation continues to unfold,” CFO Tarek Robbiati said in a press release.

Morgan Stanley analysts raised the price target by $1 to $13 per share. Still, they reiterated an Underweight rating on cautious expectations pertaining to enterprise IT spend in a more challenging macro environment.

“We remain cautious that demand trends will begin to soften towards the 2H as backlog clears, limiting upside to estimates and objectives from recent SAM. Risk of downward revisions to estimates over the coming years and recent reset in valuation keeps us UW. We could turn more positive with achievement of expected FCF improvement over next few years or with a more stable macro outlook,” they added in a note.

Stifel analysts are more bullish on HPE stock as they reiterated a Buy rating and a $20 PT.

“Noteworthy was continued growth at HPE's Greenlake as-a-Service segment, which saw ARR growth of 17%,” they said.

As of 09:12 EST (14:12 GMT), HPE stock is up over 2%.

Hewlett Packard Enterprise gains on solid earnings, guidance
 

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