What Happened?
Shares of enterprise technology company Hewlett Packard Enterprise (NYSE: HPE) jumped 4.1% in the morning session after Morgan Stanley upgraded the stock's rating and raised its price target. The investment bank raised its rating on the enterprise technology company to "Overweight" from "Equal-Weight" and significantly increased its price target to $28 from $22.
According to Morgan Stanley analyst Meta Marshall, the market is underestimating the potential financial benefits from HPE's upcoming acquisition of Juniper Networks. The firm's positive outlook suggests that the integration of Juniper could lead to better-than-expected performance, fueling renewed confidence among investors and driving the stock higher.
After the initial pop the shares cooled down to $21.60, up 2.6% from previous close.
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What Is The Market Telling Us
Hewlett Packard Enterprise’s shares are very volatile and have had 21 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 20 days ago when the stock dropped 3.5% on the news that a surprisingly weak U.S. jobs report was released, fueling concerns about a slowing economy. The U.S. economy added only 73,000 jobs, falling significantly short of economists' expectations, while figures for May and June were revised down, erasing 258,000 previously reported jobs. The professional and business services industry itself shed 14,000 jobs. This data points to a cooling labor market, fueling concerns of a slowing economy. A weaker economic outlook often leads to reduced corporate spending on key services like IT consulting and professional staffing, which directly impacts the sector's revenue and growth prospects. The report immediately increased investor expectations of an interest rate cut by the Federal Reserve.
Hewlett Packard Enterprise is up 0.6% since the beginning of the year, but at $21.60 per share, it is still trading 11.5% below its 52-week high of $24.42 from January 2025. Investors who bought $1,000 worth of Hewlett Packard Enterprise’s shares 5 years ago would now be looking at an investment worth $2,315.
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