Introduction
On April 21, 2023, CFRA downgraded Hewlett Packard Enterprise (NYSE:HPE) to Sell from Buy, cutting its price target by 22% from $18.00 to $14.00. CFRA cited various reasons for the downgrade, including declining revenue, increasing competition, and concerns over HPE’s ability to meet its long-term growth targets.
Reasons for the Downgrade
One of the main reasons for the downgrade was declining revenue. According to CFRA, HPE’s revenue has been declining over the past few quarters, with the company reporting a 3% decline in revenue in the most recent quarter. CFRA expects this trend to continue in the near term, which could put pressure on HPE’s stock price.
Another reason for the downgrade was increasing competition. CFRA noted that HPE faces intense competition in the enterprise technology market, particularly from cloud computing giants like Amazon Web Services and Microsoft Azure. As a result, HPE’s market share has been declining, which could further impact its revenue and earnings.
CFRA also expressed concerns over HPE’s ability to meet its long-term growth targets. HPE has set ambitious growth targets, including increasing revenue by 4-6% annually and achieving double-digit earnings growth. However, CFRA believes that HPE may struggle to meet these targets given the challenges it faces in the market.
CFRA’s Recommendations
Given these concerns, CFRA downgraded HPE to Sell and cut its price target to $14.00. This represents a 22% decline from its previous price target of $18.00. CFRA believes that HPE’s stock is overvalued given the challenges it faces in the market, and that investors should consider selling their shares.
CFRA also recommended that HPE take steps to address the challenges it faces in the market. This could include investing more in research and development to develop new products and services, as well as partnering with other companies to expand its market reach.
Conclusion
In conclusion, CFRA has downgraded HPE to Sell and cut its price target to $14.00, citing various concerns including declining revenue, increasing competition, and doubts over HPE’s ability to meet its long-term growth targets. While these concerns may put pressure on HPE’s stock price in the near term, the company has the opportunity to address them by investing in new products and services and partnering with other companies to expand its market reach.
