Deutsche Bank Reiterates Buy as Hewlett Packard Enterprise (HPE) Reports In-Line 1Q
Deutsche Bank reiterated a Buy rating and $19.00 price target on Hewlett Packard Enterprise (NYSE: HPE), following the company's 1Q earnings report. HPE reported sales of $12.7B and EPS of $0.41, in line with Consensus at $12.7B / $0.40. Hardware sales saw another strong quarter, with sales up 7% Y/Y in CC, driven by strength in all of HPE’s hardware categories, providing further evidence that secular IT shifts are not a drag.
Analyst Sherri Scribner commented, "In its first quarter as an independent company, HPE delivered solid results, with sales up 4% Y/Y in constant currency (CC), despite macro challenges. Hardware sales grew for the 5th straight quarter, and the turnaround in Services is on track with sales growing slightly for the first time since 2012. Highlighting a focus on shareholder returns, mgmt committed to returning at least 100% of free cash flow to shareholders in FY-16, up from prior targets of 50%, and indicated it would use $2B in proceeds from HC3 for buybacks. We continue to believe HPE is well positioned for the changing IT landscape, and view current discounted valuations as undeserved. Maintain Buy."
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Shares of HP Enterprise closed at $13.60 yesterday.