Buybacks Underscore Hewlett-Packard Enterprise's Confidence

Brean Capital's Ananda Baruah maintained a Hold rating on Hewlett Packard Enterprise Co HPE.

"We continue to like HPE's recent execution and admit valuation is appealing," Baruah said, while adding, "HPE feels good about continuing to execute on Services and hitting its targets after three solid Q's of execution."

Apart from market forces, the analyst believes that the company does not believe much else could go wrong. However, Hewlett Packard would need to undertake M&A to add the crucial Enterprise IP to its portfolio.

Baruah believes the company is strategically aligning software, hardware and services, while preparing itself for opportunities in transformation, analytics, security and productivity.

According to the Brean Capital report, "Management expects Enterprise to lead company growth with modestly expanding margins. Software offerings now aim to better align with the Enterprise and Services portfolios, and to create cross-selling opportunities."

Hewlett Packard expects Software revenue to be pressured during the transition, although management is committed to its go-to-market campaign for its SaaS and subscription-based offerings.

The company reported its January quarter revenue and EPS more or less in line with the consensus, while guiding to April quarter EPS of $0.39 - $0.43.

The FY16 guidance has been left unchanged at $1.85 - $1.95.