Analyst Note| Mark Cash |
We are maintaining our $14 fair value estimate for no-moat Hewlett Packard Enterprise, or HPE, after the company reported third-quarter earnings. While year-over-year revenue growth was largely in line with our expectations, HPE’s adjusted earnings came in much higher due to a strong performance from higher margin products and better operating expense management. HPE’s growth areas, including solutions for secure connectivity in a cloud-first environment and high-performance compute systems, performed very well as legacy solutions like commodity servers have not recovered out of the pandemic yet. With no large surprises coming out of the quarter, we view shares, which stayed stable after reporting, as fairly valued.