Here's All The Sell-Side Reaction To Hewlett Packard Enterprise's Q4 Earnings

Hewlett Packard Enterprise Co HPE reported mixed results for its fourth quarter, and its first quarter EPS forecast missed consensus at the mid-point.

Hewlett Packard Enterprises reported fourth-quarter revenue at $12.48 billion, below the consensus forecast of $12.82 billion, due to weak enterprise service segment. However, the EPS of $0.61 marginally topped the consensus expectation of $0.60, driven by improved margins and cost controls.

For the first quarter, the company guided non-GAAP EPS of $0.42–$0.46, versus consensus view of $0.46.

Sell-Side Reactions

Following is the sell-side reaction to Hewlett Packard Enterprise’s Q4 print:

Barclays, which has an Underweight rating on the stock and target price of $18, expects shares to remain under pressure near term as the remaining co’s assets such as servers, storage and networking are exhibiting signs of growth challenges.

“The silver lining was that operating margin improved more than 200 bps, which is likely a crowd pleaser ahead of the CSC-related services spin-off,” analyst Mark Moskowitz wrote in a note.

According to Global Equities Research analyst Trip Chowdhry, Hewlett Packard Enterprise’s earnings beat and forward guidance mean “nothing.” Chowdhry believes the company will inevitably fall victim to competition from Amazon.com, Inc. AMZN, Microsoft Corporation MSFT and other competitors in the era of “SuperClouds.”

However, Bernstein’s A.M. (Toni) Sacconaghi Jr. believes that any weakness in Hewlett Packard Enterprise shares would present an attractive opportunity to add positions. The analyst noted that the stock “remains truly inexpensive, particularly on a post-ES and SW spin basis, and offers good downside protection.”

Sacconaghi maintains an Outperform rating on the company, with a price target of $24.50.

Similarly, Citi’s Jim Suva maintains a Buy rating on the company’s shares, while raising the price target to $27 from $25, saying that investors could be underappreciating the free cash flow of the business.

Also, Credit Suisse reiterated its Outperform rating and target price of $26 on the shares, given an improving business mix, pending a spinoff of enterprise services and the software group.

Meanwhile, BMO believes the pending divestitures will help streamline the business, better position the company for growth, and unlock value to further support a strong capital return program. Analyst Tim Long reiterated his Outperform rating and raised his price target to $27 from $26.

At last check, shares of Hewlett Packard Enterprise rose 2.73 percent to $23.50.