Morgan Stanley Upgrades HP Enterprise to Overweight with $28 Price Target

Morgan Stanley has upgraded HP Enterprise to Overweight from Equal Weight with a price target of $28, up from $22. The firm believes the July quarter results for enterprise hardware will modestly outperform expectations due to robust artificial intelligence spend and solid PC sales in Q2. The analyst's bull case valuation is $39, assuming HP Enterprise trades in-line with peers.

Morgan Stanley has upgraded Hewlett Packard Enterprise (HPE) to "Overweight" from "Equal Weight," raising the price target to $28 from $22. The investment bank's positive outlook is driven by expectations of robust artificial intelligence (AI) spending and solid PC sales in the second quarter. The analyst's bull case valuation is $39, assuming HPE trades in line with industry peers [1].

The upgrade comes following HPE's acquisition of Juniper Networks, which Morgan Stanley believes will significantly bolster the company's networking business and AI exposure. The firm expects HPE's July quarter results to modestly outperform expectations, with a bullish view on the company's future earnings and cash flow potential [2].

HPE's shares jumped 4.1% in the morning session following the upgrade, reflecting investors' renewed confidence in the company's prospects. However, the stock's volatility remains high, with 21 moves greater than 5% over the last year [3].

Looking ahead, several upcoming catalysts could drive HPE's stock performance. The company's third-quarter results, scheduled for September 3, are expected to be a positive catalyst. Additionally, the company's analyst day in October is viewed as "the most important upcoming catalyst," where HPE is expected to provide longer-term forecasts [2].

Despite the upgrade, Wall Street remains divided on HPE's stock. While Morgan Stanley and some other analysts maintain a bullish view, with 10 out of 20 analysts giving a strong buy or buy rating, the remaining 10 have a hold rating [2].

References:
[1] https://sherwood.news/markets/hp-enterprise-jumps-on-upgrade-to-buy-from-morgan-stanley/
[2] https://theoutpost.ai/news-story/morgan-stanley-upgrades-hewlett-packard-enterprise-on-ai-and-networking-potential-19381/
[3] https://finance.yahoo.com/news/hewlett-packard-enterprise-hpe-stock-151604967.html