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Investing.com -- Evercore ISI added Hewlett Packard Enterprise (NYSE:HPE) to its "Outperform List", saying the company is well positioned to beat July-quarter expectations and issue a stronger outlook once its Juniper Networks (NYSE:JNPR) acquisition is reflected in results.
The broker said demand for networking gear is improving and year-on-year comparisons should remain favorable through the rest of the year.
It also expects HPE to benefit from stronger AI server sales as GPU supplies improve. HP Inc (NYSE:HPQ) recently mentioned a large AI order shipping in the current quarter, suggesting broader sector momentum.
Evercore believes HPE could guide October-quarter revenue above the roughly $10.1 billion analysts now expect on a pro-forma basis.
The brokerage pointed to reports of recent networking wins by Juniper with Oracle (NYSE:ORCL) and xAI as a sign the unit could grow faster than predicted.
Cost-cutting efforts from the Juniper deal could also lift earnings in the first year of ownership. HPE is targeting $200 million in cost savings initially and $600 million over three years.
Outside the acquisition, Evercore said HPE’s core server business is improving thanks to a refresh cycle and better execution after earlier missteps.
The company’s internal cost-saving plans, including a planned 5% workforce cut in fiscal 2025, should also help margins.
“HPE is well positioned to drive upside in the Jul-qtr and through the near-term following the closing of its Juniper acquisition and shift in revenue and profit weighting towards networking,” the broker wrote, maintaining its Outperform rating and $28 price target.