Barclays downgrades HP Enterprise stock rating on valuation

Barclays has reduced its rating on HP Enterprise (NYSE:HPE) stock to Equalweight from Overweight and revised its price target downward to $77 from $83. Analyst Tim Long highlighted the company's strong performance this year, with shares surging by roughly 186% year-to-date, outpacing the S&P 500's 14% growth. Barclays noted that HP Enterprise has transcended a pure enterprise focus due to the acquisition of Juniper Networks, where networking now contributes roughly half of operating profits.

The firm anticipates a networking revenue compound annual growth rate ranging from high teens percent for the fiscal years 2026 through 2029. Barclays emphasized that this growth has been widespread, driven by improved positioning in artificial intelligence markets such as scale-up and scale-across segments, as well as campus networks.

In servers and storage, the company has managed higher average selling prices to boost revenues while preserving gross margins. However, Barclays sees limited upside as memory prices stabilize. The analyst did not alter its financial projections but lowered the price target based on a price-to-earnings ratio of 13 times the fiscal 2028 earnings per share estimate of $5.92, a decrease from the previous multiple of 14 times.

Investors can delve into HP Enterprise's valuation and growth prospects through the detailed Pro Research Report accessible exclusively on InvestingPro for this and 1,400+ other US equities. Other analysts have recently expressed differing opinions on HP Enterprise. Daiwa Securities upgraded the stock to Outperform with a price target of $75, citing an optimistic networking growth outlook.

Piper Sandler increased its price target to $70, focusing on potential growth in artificial intelligence and data center refresh segments. Truist Securities raised its target to $75, praising the company's enhanced guidance and accelerating cloud and AI growth. Conversely, Wells Fargo adjusted its target to $63, acknowledging the superior-than-expected performance of the Juniper integration.

Evercore ISI downgraded HP Enterprise to In Line from Outperform, maintaining a price target of $65, citing significant share appreciation and valuation concerns.