Market Overview

Morgan Stanley: Meg Whitman's Departure Limits Upside For Hewlett-Packard

Share:
Morgan Stanley: Meg Whitman's Departure Limits Upside For Hewlett-Packard
Related
Benzinga's Top Upgrades, Downgrades For January 16, 2019
This Chart Shows What A Brutal December It's Been For The S&P 500

Hewlett Packard Enterprise Co (NYSE: HPE) announced the premature resignation on Tuesday of CEO Meg Whitman, who had previously planned to step down Feb. 1.

Whitman’s departure far outweighed the firm’s fourth-quarter earnings beat, catalyzing a sharp sell-off in the stock and reinforcing analyst caution.

The Rating

Morgan Stanley analyst Katy Huberty maintained an Equal-weight rating on Hewlett-Packard with a $14 price target.

The Thesis

Hewlett Packard’s leadership turnover is seen to hinder the firm’s restructuring process as it fends off competition from Dell and NetApp Inc. (NASDAQ: NTAP), Huberty said. (See Huberty's track record here.) 

Morgan Stanley identifies heightened execution risk as HPE reduces its stock keeping units, shrinks its geographic reach and condenses management and compensation.

The transition is also considered disruptive to HPE’s product portfolio innovation, which was reported on the earnings call to be management’s pressing focus.

“The combination of CEO transition and further cracks in execution limit share price upside near term,” Huberty said in a Wednesday note.

Setbacks in the firm’s strategy may be offset by mix shift to networking and services, which Huberty expects to drive margin expansion.

Price Change

HPE traded down 8.5 percent Wednesday at a rate of $12.90. The stock is down nearly 44 percent year-to-date.

Related Links:

The Easy Money Has Already Been Made In HP Enterprise

Einhorn's Positions In HPE, Micron, Tempur Sealy Create Curious Volatility

Latest Ratings for HPE

DateFirmActionFromTo
Jan 2019Morgan StanleyDowngradesOverweightEqual-Weight
Dec 2018Maxim GroupMaintainsHoldHold
Oct 2018Raymond JamesMaintainsOutperformOutperform

View More Analyst Ratings for HPE
View the Latest Analyst Ratings

Posted-In: Katy Huberty Meg Whitman Morgan StanleyAnalyst Color Price Target Reiteration Top Stories Analyst Ratings Best of Benzinga

 

Related Articles (NTAP + HPE)

View Comments and Join the Discussion!

Latest Ratings

StockFirmActionPT
MDRXKeyBancUpgrades0.0
ANETNomuraUpgrades260.0
CNPRBC CapitalUpgrades34.0
FISVOppenheimerUpgrades88.0
FNDUBSUpgrades37.0
View the Latest Analytics Ratings
Don't Miss Out!
Join Our Newsletter
Subscribe to:
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Daily Analyst Rating
A summary of each day’s top rating changes from sell-side analysts on the street.
Fintech Focus
Your weekly roundup of hot topics in the exciting world of fintech.
Thank You
for registering for Benzinga’s newsletters and alerts.
• The Daily Analysts Ratings email will be received daily between 7am and 10am.
• The Market in 5 Minutes email will be received daily between 7am and 8am.
• The Fintech Focus email will be received every Friday between 2pm and 5pm.

2 Takes On GameStop's Better-Than-Anticipated Q3

Analyst: Kellogg's Recent Pullback Is A Buying Opportunity