Hewlett Packard Enterprises – an unnoticed AI star?
Earnings from Hewlett Packard Enteprises this week could show that the company has the potential to benefit from the ongoing surge in demand for all things related to artificial intelligence.
For its upcoming fiscal second quarter (Q2) 2024 earnings release on June 4th, analysts expect Hewlett Packard Enterprises (HPE) to report revenue of $6.83 billion and earnings per share (EPS) of $0.39.
For the full fiscal 2024 year, HPE is guiding for flat revenue growth compared to 2023, along with adjusted EPS between $1.82 and $1.92. Wall Street analysts have a slightly more optimistic outlook, forecasting a modest 0.4% year-over-year (YoY) revenue increase to $29.2 billion and adjusted EPS of $1.88. While below last year's earnings of $2.15 per share, the stock may be undervalued at just 12.6 times projected free cash flow if HPE can grow its profits and cash flows going forward, especially given opportunities in the fast-growing AI server market.
Most Wall Street analysts remain on the sidelines regarding HPE stock. Out of 13 analysts covering the company, 11 currently rate the shares as a "hold", with just one "buy" and one "strong buy" recommendation.
Despite its underperformance relative to the broader market since being spun off from HP in 2015, HPE's stock price is only 9% off its all-time highs
HPE stock price – what do the brokers say?
LSEG Data & Analytics data shows a consensus analyst rating of ‘hold’ for HP – 1 strong buy, 3 buy and 12 hold - with the median of estimates suggesting a long-term price target of $17.78 for the share, around 1% higher than the current price (as of 3 June 2024).
HPE stock price – technical view
HP’s share price, which is up around 4% year-to-date, continues its advance towards its May peak at $18.95, made not far below its previous March 2018 all-time high at $19.48 and its March 2024 $20.07 record high.
HP Monthly Chart
On the daily chart the HP share price managed to find support along the 55-day simple moving average (SMA) at $17.47 last week and is expected to fill last week’s $17.97 to $18.29 price gap as long last week’s low at $17.31 underpins.
HP Daily Chart
Were last week’s $17.31 low to give way, though, the 200-day SMA at $16.68 and late-March to May lows at $16.50 to $16.26 would be back on the plate.
A rise above the April and May peaks at $18.76 to $$18.95 is needed, for the March record high at $20.07 to be back on the map.
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