On May 20, Evercore ISI analyst Amit Daryanani upped Hewlett Packard Enterprise Company (NYSE:HPE)’s stock from “In Line” to “Outperform,” increasing the price objective from $17.00 to $22.00.
The analyst highlighted a balanced risk/reward profile, which can be particularly attractive to long-term investors. Daryanani’s upgrade comes off the back of 4 potential scenarios for the company’s stock. Firstly, assuming the successful closure of the Juniper Networks deal, Hewlett Packard Enterprise Company’s EPS is expected to be supported by cost synergies. The second scenario, which excludes Juniper Networks, sees the company’s operating margins being improved, with Hewlett Packard Enterprise Company posting an EPS that can fuel its stock price.
A woman programmer in a modern office working with multiple computer servers.
The third scenario, without the Juniper acquisition, assumes the business-as-usual case for the company, which can help the stock remain stable. Finally, the fourth scenario reflects the sum-of-the-parts approach, exhibiting potential value from allocating higher multiples to Hewlett Packard Enterprise Company’s networking and storage segments, which can lead to a valuation in the $25-$30 range. The analyst opines that the possibility of a last scenario is higher, while the downside risk remains limited to around $15-$16.
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