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Investing.com - BofA Securities raised its price target on HP (NYSE:HPQ) Enterprise (NYSE:HPE) to $24.00 from $23.00 while maintaining a Buy rating. The new target sits below the Street’s high target of $29 but well above the current trading price of $21.29. According to InvestingPro data, seven analysts have recently revised their earnings expectations upward for the upcoming period.
The firm cited increased cost synergy expectations from the Juniper acquisition as the primary reason for the adjustment. HP Enterprise now expects at least $600 million in cost synergies over the next three years, up from its previous estimate of $450 million.
One-third of these savings will be realized by the end of the first year, with the remainder spread evenly across the following years. The benefits will be accretive to non-GAAP EPS in the first full year and accretive to free cash flow in years two and three.
HPE CEO Antonio Neri attributed the additional $150 million in synergies to two main factors: incremental opportunities from synergy for its networking business and COGS benefits to HPE’s global supply chain as Juniper’s procurement process improves.
BofA Securities noted that full, detailed guidance will be provided during HP Enterprise’s Analyst Day in October, and based its new price target on 10x CY26E pro-forma EPS of $2.30.
In other recent news, Hewlett Packard Enterprise (HPE) has completed its acquisition of Juniper Networks (NYSE:JNPR), leading to a series of updates and evaluations from various firms. Evercore ISI raised its price target for HPE to $25 from $22, maintaining an Outperform rating, citing expected cost synergies and EPS accretion from the acquisition. Raymond (NSE:RYMD) James reiterated its Strong Buy rating with a $29 price target, highlighting increased synergy targets and plans for more financial details in upcoming earnings calls. S&P Global revised HPE’s outlook to stable from negative, forecasting revenue growth in the mid-teens for fiscal years 2025 and 2026, and projecting HPE’s leverage to decline significantly by fiscal 2026.
Additionally, HPE secured two contracts totaling $56 million from the U.S. Department of Defense for high-performance computing projects. These contracts involve work at Stennis Space Center in Mississippi and Wright Patterson Air Force Base in Ohio. Meanwhile, KeyBanc initiated coverage on HPE with a Sector Weight rating, expressing concerns about HPE’s competitive positioning and the strategic risks associated with the Juniper acquisition. Despite these concerns, KeyBanc acknowledged potential benefits from industry trends like artificial intelligence. These developments reflect a period of strategic shifts and financial recalibrations for HPE as it integrates Juniper Networks into its operations.
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