Analyst Note| William Kerwin |
We maintain our $16 fair value estimate for shares of no-moat HP Enterprise, or HPE, after the firm’s fiscal third-quarter results met guidance and the outlook for the fourth quarter met our expectations. HPE continues to enjoy robust networking demand, and is garnering artificial intelligence-related orders for its supercomputers. Standard compute servers (not for AI) and storage arrays are seeing softer demand with customers still working down their own inventories, but we retain a positive view on HPE’s profitability even amid weaker demand. We see shares as fairly valued.