Shares of Hewlett Packard Enterprise (NYSE:HPE) rose about 4% premarket on Thursday after third quarter results surpassed estimates which also drew largely positive reactions from analysts.
Morgan Stanley maintained its Overweight rating and $28 price target on Hewlett’s stock.
Analysts led by Erik Woodring said the “results were modestly ahead of our expectations with relative strength in Servers and Networking,” adding that they would keep their eyes on AI server margins, but believe the results set up positively for HPE’s Analyst Day on Oct. 15, a key stock catalyst.
The analysts said July quarter revenue beat Morgan Stanley estimates by 4%, with more than 100% of upside coming from Servers and Networking. AI server revenues were in-line at $1.6B; orders ($2.1B), backlog ($3.7B) and qualitative factors (sovereign orders up 250% quarter-over-quarter) were solid. However, margins were weak, according to the analysts.
Woodring and his team added that Networking is already accounting for 46% of operating income with only one month of Juniper Networks’ results, ahead of their expectations.
Wells Fargo kept its Equal Weight rating on the stock but raised the price target on the stock to $26 from $22.
“We think HPE delivered net positive results & guide [guidance],” said analysts led by Aaron Rakers.
The analysts noted that they maintained their rating as they continue to see Juniper strategyexecution and AI server profitability risk, adding that the focus moves to the company’s Analyst Day.
Related stocks: IBM (IBM), Dell Technologies (DELL), Microsoft (MSFT) and Cisco Systems (CSCO) were largely flat premarket on Thursday.