Hewlett Packard Enterprise rises as Evercore turns bullishh

Juniper Networks

20/05/2025 14:58

Corrects typo in headline

** Hewlett Packard Enterprise's HPE.N shares up 1.4% at $17.71 early Tues after Evercore upgrades AI server maker to 'outperform' from 'in line'

** Brokerage hikes PT by $5 to $22, or 26% above stock's last close

** Evercore analyst team led by Amit Daryanani says current risk/reward is attractive for investors that have the duration, outlining several scenarios for potential upside

** Daryanani says first scenario assumes Juniper JNPR.N deal closes as expected, which could result in $300 mln in cost synergies in year one and lead to double-digit EPS growth

** In second scenario, JNPR deal doesn't get done but HPE implements significant cost and margin improvements across its units, driving EPS to $2.50-$2.60 and stock to $26-$31

** The third scenario is least favorable, Daryanani says, in that JNPR deal doesn't come to fruition and HPE margins are expected to remain flat and stock to stay range-bound at $15-$16

** A fourth and final scenario is a sum of the parts analysis, whereby HPE's valuation reflects a $25-$30 stock price, he says

** Last month, reports said activist hedge fund Elliott Investment Management built a stake of more than $1.5 bln in HPE, while co is in process of acquiring JNPR in $14 bln deal but has been sued by the U.S. DOJ on antitrust grounds

** With move on the session, HPE shares down 17% YTD vs ~1.5% drop in S&P 500 Tech sector .SPLRCT

(Lance Tupper is a Reuters market analyst. The views expressed are his own)

((lance.tupper@tr.com 1-646-279-6380))