Needham & Company Upgrades HP Enterprise (HPE) to Buy

Needham & Company upgraded HP Enterprise (NYSE: HPE) from Hold to Buy with a price target of $22.00 after the comapny announced its plan to spin off and merge its $18B Enterprise Services business with CSC.

Analyst Richard Kugele commented, "In our view, one thing HP in the Meg Whitman era has done successfully is find opportune times to divest assets. In the case of the perennial albatross services business, after years of restructuring and contract pruning, the business is finally generating improving operating margins enough to find a buyer (which would not have been possible at the time of the split in 2014). While growth in the remaining businesses is not without its challenges (and execution has been anything but consistent) we do believe that HPE should be trading closer to $22 to reflect this new, more streamlined business (11x NTM ex services HPE of ~$1.53 plus roughly $5 in value from the CSC transaction). Consequently, we are upgrading to Buy from Hold."

For an analyst ratings summary and ratings history on HP Enterprise click here. For more ratings news on HP Enterprise click here.

Shares of HP Enterprise closed at $16.25 yesterday.

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