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On Thursday, Evercore ISI analyst Amit Daryanani reiterated an In Line rating and a $22.00 price target on HP (NYSE:HPQ) Enterprise (NYSE:HPE), in light of recent legal developments. The U.S. Department of Justice (DOJ) has filed a lawsuit to block HPE’s proposed acquisition of Juniper Networks (NYSE:JNPR), a move that challenges the merger’s potential impact on competition, particularly against Cisco Systems (NASDAQ:CSCO). The news has significantly impacted Juniper’s stock, which according to InvestingPro data, has fallen nearly 10% in the past week and is currently trading near its 52-week low of $34.30.
Despite receiving unconditional clearance for the acquisition from several jurisdictions including the European Union, United Kingdom (TADAWUL:4280), India, South Korea, and Australia, HPE now faces a significant legal hurdle in the United States. The DOJ’s action follows recent engagements between HPE and the DOJ, including a meeting held this week. InvestingPro analysis shows Juniper maintains strong fundamentals with a current ratio of 1.72, indicating healthy liquidity to weather uncertainty. Subscribers can access 12 additional ProTips and comprehensive financial analysis through the Pro Research Report.
The pre-trial hearings for HPE and Juniper Networks are expected to unfold over the coming months, with a final walk-away date set for October 9, 2025. If the deal falls through, HPE would be responsible for an $815 million termination fee, while Juniper would incur a $407.5 million fee.
Daryanani provided insights into the financial outlook for HPE and Juniper Networks, suggesting that on a standalone basis, HPE could achieve earnings per share (EPS) of approximately $2.25 to $2.30 in FY26. This is slightly lower than the anticipated $2.50 to $2.60 EPS post-acquisition. The analyst expects HPE’s stock to trade in the low-$20s, which aligns with historical price-to-earnings (P/E) ratios of 8 to 11 times.
For Juniper Networks, the standalone earnings power is estimated at around $2.10, indicating a potential 9% downside to current share prices, which would equate to approximately $31.50 based on historical average P/E ratios of around 15 times.
The trial process and the uncertainty it brings to HPE’s Intelligent Edge strategy are highlighted as concerns, as customers may face uncertainty throughout the trial. The analyst concluded by noting that HPE and Juniper Networks could experience a downside bias from their current levels due to competitive pressures and customer uncertainty during the trial process. Despite market challenges, InvestingPro data reveals Juniper’s resilience through its 11-year track record of consistent dividend payments and a current yield of 2.5%. The company’s Fair Value assessment and overall financial health score of "Fair" suggest balanced risk-reward potential during this period of uncertainty.
In other recent news, Hewlett Packard Enterprise (HPE) and Juniper Networks are steadfastly defending their proposed merger against a Department of Justice (DOJ) lawsuit. The companies argue the merger will stimulate innovation and competition, contrary to the DOJ’s concerns of potential anti-competitive consequences in the Wireless Local Area Network sector. The merger has been approved by antitrust regulators in 14 jurisdictions, with the U.S. and Israel being the only countries yet to clear the deal.
In preparation for the merger, Juniper Networks has approved accelerated compensation for certain officers, including executive Robert Mobassaly, to mitigate potential tax impacts. Amid these developments, Citi has maintained a neutral rating on Juniper Networks shares.
Juniper Networks recently surpassed Q3 revenue and profit estimates, with revenue reaching $1.33 billion and adjusted earnings reported at 48 cents per share. The company also invested in Recogni’s AI venture as part of a $102 million Series C funding round. These are the recent developments for the companies.
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