As Hewlett Packard Enterprises (HPE) continues to beat analyst estimates this year and continues its turnaround, the stock may offer some buying opportunity in the near term.
"The stock looks attractively valued relative to the market and peer-group multiples, though the slightly depressed multiple reflects the expected deceleration in the second half," JP Morgan executive director Paul Coster wrote in a note this morning. "Continued solid execution, incremental strength in IT spending, and re-acceleration of revenues could get us more constructive quite quickly."
HPE's P/E ratio currently stands at 10.9 per JP Morgan data filed in a note this morning. The data shows this is a 34% discount to its peer group. Further, FactSet data shows the company currently maintains the lowest EBITDA multiple among its peers, nearly halving the median.
While remaining neutral on the stock, preferring competitors as more attractive opportunities, he set a price target of $20, above the $17.54 price, which already reflects over 4% growth since the company's earnings..
Real Money's technical analyst Bruce Kamich highlighted the signs the stock is poised for a rally.
Kamich pointed out that trend-following Moving Average Convergence Divergence (MACD) oscillator has moved above the zero line for an outright go long buy signal this month, offering the first such opportunity for the company this year according to the oscillator.
Deutsche Bank AG (DB) analyst Sherri Scribner said that the company's current stock price and valuation "is not adequately reflecting HPE's upside potential."
She set a buy rating for the stock and price target of $23, giving the stock a 27% upside from Tuesday's close.
Further, as the company is in mid-turnaround and its executive suite continues to be shuffled, some analysts are much happier to wait for a catalyst.
"While we have begun to see some recovery in key areas of the business, we remain on the sidelines and look for more consistent signs of growth and stability in the core businesses," BMO Capital Markets senior equity analyst Tim Long wrote in a research note on Tuesday.
He remained neutral on the stock, setting a small growth window for the company with a price target of $18.
