On Monday, Loop Capital made an adjustment to its financial outlook for shares of HP (NYSE:HPQ) Enterprise (NYSE: HPE), raising the price target to $24.00, up from the previous $18.00. The new target aligns with broader market sentiment, as InvestingPro data shows seven analysts have recently revised their earnings estimates upward, with analyst targets ranging from $19 to $29.
Despite this change, the firm has decided to maintain a Hold rating on the company's stock, reflecting the current consensus among analysts.
The decision to increase the price target follows a reassessment of revenue projections, influenced by the successful integration of Roku (NASDAQ:ROKU) into The Trade Desk's (NASDAQ:TTD) operations. HPE has shown strong momentum, with InvestingPro data revealing a remarkable 51.89% return over the past year and currently trading near its 52-week high of $24.24.
The analyst from Loop Capital emphasized the positive outcome of this integration, which has led to a revision of the price target for Roku to $80 from $70, reflecting a more optimistic financial forecast.
The analyst also addressed the speculation regarding a potential sale of Roku, concluding that such an event is unlikely. The founder, CEO, and controlling shareholder of Roku, Anthony Wood, is not believed to be interested in selling the company. Furthermore, potential buyers such as The Trade Desk and Netflix (NASDAQ:NFLX) are not expected to pursue an acquisition.
Loop Capital's stance remains neutral, expressing an interest in seeing an acceleration of platform revenue growth beyond the current low to mid double-digit range. However, the firm acknowledges that Roku's valuation is not overly demanding. At approximately 2 times the firm's 2025 revenue estimate, and considering Roku's positive adjusted EBITDA and free cash flow, the valuation appears reasonable.
The analyst's comments suggest a cautious but acknowledging tone towards Roku's financial health and future prospects, while the updated price target for HP Enterprise indicates a positive adjustment in the company's revenue estimates. Loop Capital's continued Hold rating on HP Enterprise reflects a watchful but not fully committed investment stance.
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