What Happened?
Shares of enterprise technology company Hewlett Packard Enterprise (NYSE: HPE) jumped 2.2% in the afternoon session after Citigroup reiterated its Buy rating on the stock and raised its price target to $28 from $26.
The firm's positive view was based on several factors. Citi noted the expected long-term revenue growth from the company's planned acquisition of Juniper and continued strong demand for its Artificial Intelligence (AI) business, which had a substantial backlog. The analyst also pointed to an expected improvement in income from the higher-margin networking segment, which was projected to enhance earnings growth. This positive sentiment was also reflected by J.P. Morgan, which had recently reiterated a Buy rating on the stock as well.
The shares closed the day at $24.80, up 1.5% from previous close.
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What Is The Market Telling Us
Hewlett Packard Enterprise’s shares are quite volatile and have had 17 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The biggest move we wrote about over the last year was 7 months ago when the stock dropped 20.1% on the news that the company reported weak fourth-quarter (fiscal Q1 2025) results: its full-year EPS guidance missed significantly, and its revenue guidance for the next quarter fell short of Wall Street's estimates.
On the bright side, sales were up 16% year on year, thanks to strong momentum in servers and hybrid cloud. Server revenue surged 29%, while hybrid cloud sales climbed 10%. Those gains helped cushion some softness in the Intelligent Edge business. Despite the revenue beat recorded during the quarter, operating margins declined meaningfully, and free cash flow also came in negative. The company now expects non-GAAP operating profit to be anywhere from flat to down 10% for the year, which signals some real margin pressure. Overall, this was a softer quarter, with strong revenue growth offset by margin contraction and weak guidance.
Hewlett Packard Enterprise is up 15.5% since the beginning of the year, and at $24.79 per share, it is trading close to its 52-week high of $25.24 from September 2025. Investors who bought $1,000 worth of Hewlett Packard Enterprise’s shares 5 years ago would now be looking at an investment worth $2,593.
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