The company's third-quarter results included light revenue and a low-quality EPS beat. The company guided fourth-quarter EPS of $0.605, roughly in line with the consensus of $0.61.
In addition, HP Enterprise announced it intends to spin out most of the software business to a new entity combined with U.K.-based Micro Focus.
HP Enterprise trades at 2.5x on an EV/CY17E EBITDA basis when omitting the impact of the services and software spins (and ex-FS debt), below the group average of 6x. Jefferies' $27.00 target is based on 6x EV/CY17E EBITDA (ex-services and software).
"We continue to believe HPE shares offer a compelling valuation and will continue to rise as investors become more comfortable with HPE's revenue and free cash flow outlook," analyst James Kisner wrote in a note.
At time of writing, shares of HP Enterprise fell 2.72 percent to $21.49.
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