TLDR
- HPE jumped 5% in pre-market Monday after Morgan Stanley upgraded the stock from “Equalweight” to “Overweight”
- Morgan Stanley’s $69 price target implies nearly 30% upside from Friday’s close of $53.22
- Analyst Erik Woodring called HPE the “preferred OEM to play the enterprise infrastructure cycle”
- HPE beat Q2 EPS estimates by $0.25, posting $0.79 vs $0.54 expected, with revenue up 40% year over year to $10.68 billion
- The average analyst price target sits at $69.93, with a “Moderate Buy” consensus across Wall Street
HPE stock opened the week with a bang, jumping 5% in Monday’s pre-market session after Morgan Stanley upgraded the stock.
Hewlett Packard Enterprise Company, HPE
The firm moved HPE from “Equalweight” to “Overweight,” setting a price target of $69. With Friday’s close at $53.22, that target represents roughly 30% upside from current levels.
Analyst Erik Woodring led the call, citing HPE as the firm’s top pick to ride the enterprise infrastructure cycle.
Woodring pointed to three main reasons for the upgrade: the improving outlook following the Juniper Networks acquisition, underappreciated financial momentum, and what he called a “valuation asymmetry” after the stock retraced its post-earnings gains.
On the Juniper front, recent channel checks and CIO surveys suggest HPE’s competitive position is strengthening. Networking is shifting from an integration headache into a margin-generating business, according to the analyst.
Earnings Beat and Strong Guidance
HPE’s most recent quarterly results gave analysts plenty to work with. The company reported Q2 EPS of $0.79, beating the consensus estimate of $0.54 by $0.25.
Revenue came in at $10.68 billion, up 40% year over year and ahead of the $9.78 billion analysts had expected.
For the full year, HPE issued FY2026 EPS guidance of $3.35 to $3.45. Q3 guidance was set at $0.88 to $0.93 EPS.
Morgan Stanley highlighted HPE’s accelerating free cash flow conversion and faster-than-expected debt reduction as factors the market is not fully pricing in.
Woodring’s note was direct: HPE offers the best combination of earnings upside, valuation support, and re-rating potential in the enterprise infrastructure space right now.
Institutional Interest Growing
PensionDanmark increased its HPE stake by 50.4% in Q2, adding 59,302 shares to bring its total to 176,992 shares, valued at around $8 million.
Institutional investors collectively own 80.78% of HPE. Several other funds also initiated or grew positions during the quarter.
The stock has a 52-week low of $19.84 and a 52-week high of $64.25. Its 200-day moving average sits at $33.27, well below the current price.
HPE also pays a quarterly dividend of $0.1425 per share, representing a $0.57 annualized dividend and a yield of around 1.1%.
Across Wall Street, ten analysts rate HPE a Buy and seven have it at Hold. The average price target of $69.93 is well above where the stock is currently trading.
Raymond James has the highest target at $74. JPMorgan Chase has an “overweight” rating with a $68 target. Sanford C. Bernstein rates it “market perform” with a $62 target.
The average analyst price target of $69.93 compares to a current price around $53, leaving a gap that Morgan Stanley believes the market will close as HPE’s fundamentals continue to play out.
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