HPE jumps 6% as Morgan Stanley upgrade targets $71

Hewlett Packard Enterprise shares rose 5.97 percent to $62.30 on Aug. 13 after Morgan Stanley upgraded the stock to Overweight with a $71 price target.

Morgan Stanley analyst Erik Woodring called HPE the firm's "preferred OEM to play the enterprise infrastructure cycle," citing steady demand for AI hardware even as memory costs rise. The new target implies roughly 14 percent upside from Thursday's intraday price.

The upgrade follows a Q2 FY26 earnings report that saw revenue jump 40 percent to $10.68 billion, with networking revenue up 148.2 percent to $2.7 billion after the Juniper Networks integration. Non-GAAP EPS of $0.79 beat the company's own guidance of $0.51 to $0.55. Management raised FY26 free cash flow guidance to at least $3.5 billion, a target originally set for FY28, and projected FY27 free cash flow of at least $4.5 billion. "Customers continue to invest in modernizing their infrastructure and scaling AI," CEO Antonio Neri said.

The stock has gained 159.3 percent year-to-date and 188.9 percent over the past year, closing at a fresh 52-week high of $58.79 on Aug. 12 before Thursday's continued advance. The trailing P/E of 1,263 is distorted by a $1.621 billion goodwill impairment tied to the Juniper acquisition; the forward P/E sits at 14, roughly in line with the S&P 500 despite revenue growing 40 percent last quarter.

HPE trades at approximately 13.6 times next-fiscal-year earnings estimates of $4.02 per share, a 32 percent discount to the S&P 500's 20 times forward multiple. The stock's 200-day moving average sits at $30.66, meaning shares trade at roughly double their longer-term trend line. Insiders have been net sellers across 38 recent transactions, and the stock carries a beta of 1.436.

Analyst consensus target stands at $65.45 with 13 buys, 9 holds, and zero sells, placing Morgan Stanley's $71 above the crowd. Citigroup raised its target to $74 on Jul. 24, while Goldman Sachs set $79 on Jun. 2. HPE guided Q3 revenue to $11.5 billion to $12.1 billion with adjusted EPS of $0.88 to $0.93.

The upgrade reflects continued institutional confidence in HPE's AI infrastructure business, with management pulling FY28 cash flow targets forward by two years. Investors will watch the Sept. 2 Q3 earnings report for confirmation that networking growth and margin expansion can sustain the current valuation.

This article is for informational purposes only and does not constitute investment advice.