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Hewlett Packard Enterprise Co HPE

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Morningstar’s Analysis

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Digital Transformation Demand Helps Buoy HPE’s Year-Over-Year Decline in Q1; Shares Fairly Valued

Mark Cash Senior Equity Analyst

Analyst Note

| Mark Cash |

No-moat Hewlett Packard Enterprise’s 2% year-over-year revenue decline in its first quarter matched our expectations due to weakness for storage and high performance compute solutions. Digital transformation efforts brought on by the pandemic led to strength within the intelligent edge business, as enterprises upgraded their switching and wireless infrastructure, which contributed to the overall revenue decline. We believe the worst of the pandemic is behind HPE and the company should return to year-over-year growth for the rest of fiscal 2021. Efforts to streamline the business through its transformational plan have helped the margin profile, and we expect HPE to remain more agile as it grows its software and as-a-service portfolio. We are modestly raising our fair value estimate to $14 from $13 and view shares as fairly valued.

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Company Profile

Business Description

Hewlett Packard Enterprise is a supplier of IT infrastructure products and services. The company operates as three major segments. Its hybrid IT division primarily sells computer servers, storage arrays, and Pointnext technical services. The intelligent edge group sells Aruba networking products and services. HPE's financial services division offers financing and leasing plans for customers. The Palo Alto, California-based company sells on a global scale and has approximately 66,000 employees.

11445 Compaq Center West Drive
Houston, TX, 77070
T +1 650 687-5817
Sector Technology
Industry Communication Equipment
Most Recent Earnings Jan 31, 2021
Fiscal Year End Oct 31, 2021
Stock Type Cyclical
Employees 59,400