Tech companies are increasingly under pressure to balance growth expectations with realistic earnings forecasts as market conditions evolve. While Hewlett Packard Enterprise Co's (NYSE:HPE) TAM (total addressable market) outlook for the next three years highlights mid-teens underlying growth, the fiscal 2026 guidance disappointed investors due to "lower Networking revenue driving a muted earnings outlook," according to JPMorgan.
The Hewlett Packard Enterprise Analyst: Analyst Samik Chatterjee reiterated an Overweight rating and price target of $30.
The Hewlett Packard Enterprise Thesis: The company's earnings guidance of $2.30 per share for fiscal 2026 came in below consensus, with the miss more due to margin mix than to revenue, Chatterjee said in the note.
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He added that HP's newly formed segments are:
- Cloud & AI, which includes Server (Traditional Servers and AI Servers), Storage, Financial Services, and Other.
- Networking, which comprises of Campus & Branch, Datacenter Networking, Security, and Routing.
"The pro-forma revenue performance across Cloud & AI and Networking, including their sub-segments, has been robust year-to-date, with all areas expanding at least in the low double-digit range — except for Data Center Networking, which grew by more than +40% y/y in the nine months of FY25," the analyst wrote.
While the revenue mix remained essentially unchanged, weaker margins on both Traditional and AI Servers resulted in margin headwinds for the Cloud & AI segment, he further stated.
HPE Price Action: Hewlett Packard shares were up 1.66% at $23.89 at the time of publication on Monday, according to Benzinga Pro data.
Hewlett Packard’s market cap of $31.38 billion positions it as a significant player in the technology hardware sector, while its P/E ratio of 27.65 suggests a premium valuation compared to historical averages for the industry.
The stock has shown notable resilience, trading near its 52-week high of $26.44, reflecting investor confidence amid a competitive landscape marked by rapid technological advancements and evolving consumer demands.
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