Shares of Hewlett Packard Enterprise (NYSE:HPE) declined 4% in yesterday’s extended trading session following the release of mixed results for the first quarter of FY24. The company’s quarterly performance was impacted by a slowdown in the networking business.
HPE is a global technology company providing solutions in computing, storage, networking, and services.
Q1 Earnings Snapshot
HPE posted adjusted earnings of $0.48 per share, down 23.8% compared to the prior-year quarter, but surpassed the analysts’ estimates of $0.45 per share. Meanwhile, net revenue declined 13.5% year-over-year to $6.76 billion and came below analyst estimates of $7.09 billion.
Segment-wise, the company witnessed nearly 3% year-over-year growth in revenues from the Intelligent Edge unit. However, sales at the Hybrid Cloud and Server divisions fell by 10% and 23%, respectively.
Importantly, the company’s Q1 annualized revenue run rate (ARR) jumped 42% to $1.4 billion. This metric serves as an indicator of future revenue.
Outlook
For Q2 FY24, HPE expects adjusted earnings in the range of $0.36 to $0.41 per share. Further, the company anticipates that revenue will fall between $6.6 billion and $7 billion, compared with the consensus estimates of $7.1 billion.
For Fiscal Year 2024, the company expects adjusted earnings to be in the range of $1.82 and $1.92 per share, and revenue to be flat to 2%.
Is HPE Stock a Good Buy?
Overall, the stock has a Moderate Buy consensus rating based on three Buys and seven Holds. The average HPE stock price target of $18.22 implies 19.6% upside potential to current levels. The stock is down 14% over the past year.
