Deutsche Financial institution upgrades HPE on networking progress from Juniper, valuation

Investing.com — Deutsche Financial institution upgraded Hewlett Packard Enterprise Co (NYSE:HPE) to “purchase,” given its engaging valuation and potential positive aspects from its proposed acquisition of Juniper Networks (NYSE:JNPR). The brokerage has a value goal of $25 on the inventory.

HPE trades at 5 instances its 2026 enterprise value-to-EBITDA estimates and 9 instances earnings, effectively under friends within the {hardware} and networking sectors, Deutsche Financial institution (ETR:DBKGn) famous.

Even factoring in Juniper, which can increase Hewlett Packard Enterprise’s networking income to over 40% of its whole, the inventory stays undervalued at 6 instances EBITDA and eight instances EPS.

The $5 billion Juniper deal, anticipated to shut in early 2025, brings scale to HPE’s higher-margin networking enterprise and provides vital price synergies. Deutsche Financial institution expects the deal to spice up earnings and free money move per share within the first yr, with double-digit positive aspects within the second.

“We view the proposed Juniper acquisition positively, given the newfound scale the deal brings HPE in higher-margin networking, alongside sizable price synergies,” analyst says.

HPE’s standalone operations are additionally bettering, pushed by stronger AI and server gross sales, in addition to progress in hybrid cloud and its current networking section, the observe added.

Deutsche Financial institution set a bull-case value goal within the mid-$30s, with a draw back state of affairs round $15, in comparison with HPE’s present $20.58 stage.