UPDATE: Stifel Starts HP Enterprise (HPE) at Buy
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Stifel analyst Matthew Sheerin initiates coverage on HP Enterprise (NYSE: HPE) with a Buy rating and a price target of $20.00.
The analyst comments "We initiate coverage of Hewlett Packard Enterprise with a Buy rating and $20 target price. Although some can argue that HPE is still a “show-me” story with many moving parts, we view the current risk reward set up as compelling, given an improved outlook for IT infrastructure spending through CY21 and the likelihood of at least a modest-beat-and-raise. We believe current valuation (8.5x Consensus FY22 EPS), gives the company little credit for the work done since spinning out from HP Inc. in 2015. Since then, HPE has built out – through acquisitions – a portfolio of on-prem IT hardware, software and services across compute, storage and networking, helping customers “from the edge to the cloud.”
Our forward estimates, modestly above Street, reflect low-single-digit topline growth and operating leverage, as well as strong adjusted free cash flow (HPE is targeting $2bn+ by FY23). Our $20 target price is 10x our FY22E EPS of $2.00."
Shares of HP Enterprise closed at $16.41 yesterday.
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