HPE’s Stock Has a Mixed Start To 2025: New “Buy” Rating To Set Tone For Second Half?

Hewlett Packard Enterprise (HPE) is gaining momentum, as the recent acquisition and positive analyst sentiment continues to move the stock further off lows.

Citi has resumed coverage of the tech giant with a “Buy” rating and a $25 price target, highlighting HPE's advantageous position in the burgeoning artificial intelligence (AI) and enterprise networking sectors.

HPE's stock is currently trading around $20.50, down 4.3% on a YTD basis, but fighting back strongly from April's low, up more than 65%. This positive movement reflects growing confidence in the company's strategic direction, particularly following its recent acquisition of Juniper Networks.

Citi's $25 price target suggests a potential upside of over 20% from current levels, and would take HPE to a level just above the 52 week high from January at $24.66. With HPE's stock price having dropped more than 50% from high to low, and rallying back, this has been a volatile year for holders.

Juniper Networks Acquisition: A Game-Changer for HPE

One of the core driver's behind Citi's bullish outlook is HPE's successful completion of the $14 billion acquisition of Juniper Networks earlier this month .

This acquisition is projected to significantly bolster HPE's networking capabilities and AI offerings. Juniper, a leader in AI-native networking, is expected to create substantial revenue synergies, potentially pushing HPE's stock price beyond Citi's initial target.

HPE itself anticipates strong financial performance in the upcoming fiscal year. For the first quarter of fiscal 2025, the company projects mid-teens revenue growth year-over-year, with GAAP diluted EPS estimated between $0.31 and $0.36, and non-GAAP diluted EPS between $0.47 and $0.52.

“The combination accelerates our profitable growth strategy as we deepen our customer relevance and expand our total addressable market into attractive adjacent areas,” stated HPE CEO Antonio Neri, underscoring the strategic importance of the Juniper acquisition.

Technical Picture Mixed

Technically, HPE's stock performance presents a mixed picture. While the current price of sits comfortably above both the 50-day ($18.78) and 200-day ($19.39) simple moving averages, indicating a positive long-term trend, recent movements suggest some short-term caution.

Despite the prevailing optimism, while the Juniper acquisition undoubtedly strengthens HPE's portfolio, integrating such a large entity presents inherent challenges. There are risks that synergies may not materialize as quickly or effectively as anticipated, and the divestiture of the Instant On division, however small, could create unforeseen competitive disadvantages.

The average price target of $23.43 highlights the view of the street, with HPE seen as having further room to run from here. Citi coming back to the coverage table at $25 is a boost for the bulls in the near term, yet execution will be important in order to unlock the perceived value of Wall Street.