Deutsche Bank sees merits of HP Enterprise acquiring Juniper

Deutsche Bank keeps a Hold rating on HP Enterprise (HPE) with a $17 price target after the Wall Street Journal reported the company is in advanced talks to acquire Juniper Networks (JNPR) for about $13B. Juniper is a key supplier of networking equipment and services, the analyst tells investors in a research note. The reported deal implies a 30% premium to Juniper’s current stock price of $30, the firm points out. It is not entirely surprised by the news when considering HP Enterprise’s history as an active acquirer. Strategically, Deutsche sees merits to the transaction and notes that Juniper’s verticals practically overlap with each of HP Enterprise’s renewed areas of focus: edge and networking, hybrid cloud and artificial intelligence. It believes the deal could enlarge the company’s total addressable market. Deutsche is constructive on the deal given the strategic fit and potential earnings accretion, but says HPE shares could react negatively in the near term given the size of the deal and the potential borrowing required.