HPE Enterprise’s (NYSE:HPE) earnings beat has investors excited, with prices up nearly 7% in Wednesday’s afternoon trading session. However, Wall Street analysts are split on the stock, with some predicting bullish upside potential while others remain on the sidelines.
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Importantly, investment firm JP Morgan, led by Samik Chatterjee, reiterated its Overweight rating on HP Enterprise. The firm based the bullish outlook on greater confidence in the revenue ramp for the company’s AI business. Furthermore, Chatterjee told investors that HPE is positioned for less downside risk to earnings compared to revenue. Nevertheless, he still has some worries about revenue growth and demand recovery in other product segments.
On the other hand, Citi maintained its Neutral rating on HP Enterprise and kept its price target of $18. Analysts led by Asiya Merchant cited worries about HPE’s growing dependency on revenue from its high-performance computing and AI segments.
Furthermore, unconvinced with the earnings result, Morgan Stanley reiterated its Sell rating on the stock, citing near-term macro clouds despite the long-term potential. Meta Marshall and Mary Lenox told investors the fourth quarter results were “largely as expected.” The Morgan Stanley analysts said they chose to stay on the sidelines due to insufficient visibility into HPE’s business while predicting macro weakness would continue.
HPE reported an EPS of $0.52, beating consensus estimates of $0.50. However, its revenue of $7.35 billion was a 7% decrease year-over-year and slightly lower than analysts’ expectations of $7.36 billion.
Is HPE Stock a Good Buy?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on HPE stock based on five Buys, six Holds, and one Sell assigned in the past three months, as indicated by the graphic below. After a 5.83% increase in its share price this year, the average HPE price target of $18.36 per share implies 10.5% upside potential.
