By Senad Karaahmetovic
Shares of HP Enterprise (NYSE:HPE) are slightly up in premarket Wednesday trading after the company reported in-line FQ3 results and narrowed its full-year profit forecast.
HPE reported an adjusted EPS of $0.48 to narrowly beat the consensus of $0.47 while net revenue was reported at $6.95 billion, which compares to the consensus of $6.93 billion.
For this quarter, HPE is looking for an adjusted EPS between $0.52 and $0.60, lower than the estimate of $0.59. The company expects a full-year adjusted EPS of $2.00 (the midpoint of the guidance), slightly below the $2.02 consensus.
FY Free cash flow is seen between $1.7 billion and $1.9 billion, again lower than the estimate of $1.91 billion.
A Morgan Stanley analyst cut the price target to $14 from $15 on the Underweight-rated HPE shares as macro headwinds continue to impact the business.
“HPE reported roughly in-line FQ3 results as continued strong order activity were masked by continued supply issues, increased FX and interest rate headwinds. Remain UW as we remain more cautious on macro than bullish commentary from company,” the analyst said in a client note.
A Barclays analyst is more positive on HPE given “strong underlying demand.”
“We maintain our OW on the shares due to relative good value & positive mix shift thesis, and see upside to estimates as supply headwinds diminish later this year. We believe core Server and Storage is stabilizing and moving to as-a-service, while Networking and HPC should see solid growth. Valuation is among the lowest in the group,” the analyst explained in a note.