HP Enterprise initiated with a Neutral at Citi

Citi initiated coverage of HP Enterprise with a Neutral rating and $18 price target. The analyst started a number of technology hardware names with a “mixed stance.” The hardware sector is going through a period of cyclical downturn, following a sharp acceleration in pandemic-induced demand, the analyst tells investors in a research note. The firm says commercial PCs are seeing early signs of recovery while datacenter compute and storage could continue to remain pressured. Given the “significant correlation” of stock price performance and earnings estimate revisions, Citi is “selectively biased” towards companies that are strongly positioned to areas that are poised for recovery, have mix shift enabled margin expansion and “de-risked” estimates. It says HP Enterprise’s momentum in the networking edge segment and artificial intelligence initiative are not enough to offset any potential weakness in its core server and storage segments.