Hewlett Packard Raises FY21 Profit Guidance After 4Q Beats The Street

Hewlett Packard Enterprise raised its FY21 outlook after reporting better-than-expected 4Q results. Shares of the information-technology giant were down 1.43% in Wednesday’s pre-market trading as 4Q earnings declined 24.5% year-over-year to $0.37 per share, but surpassed analysts’ estimates of $0.34.

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Hewlett Packard’s (HPE) 4Q revenues remained flat at $7.2 billion but exceeded the Street’s estimates of $6.9 billion.

Hewlett Packard’s CEO Antonio Neri said, “The global pandemic has forced businesses to rethink everything from remote work and collaboration to business continuity and data insight.” He added, “In Q4 we saw a notable rebound in our overall revenue, with particular acceleration in key growth areas of our business.”

Revenue grew 6% sequentially in 4Q driven by strong growth in the company’s High Performance Compute & Mission Critical Systems and Intelligent Edge businesses, it said.

As for 1Q, Hewlett Packard expects adjusted earnings to be in the range of $0.40-$0.44 per share, surpassing analysts’ estimates of $0.35. Moreover, the company raised its fiscal 2021 EPS guidance to $1.60-$1.78, up from its earlier guidance range of $1.56-$1.76. Analysts’ FY21 estimates stood at $1.32 per share. (See HPE stock analysis on TipRanks)

On Nov. 16, Raymond James analyst Simon Leopold upgraded the stock’s rating to Buy from Hold and maintained a price target at $14 (25% upside potential), citing “improving fundamentals and upside to estimates.” He sees “HPE’s position as better than appreciated.” Leopold added, “we envision upside potential for the Servers in a macro recovery.”

Currently, the Street has a cautiously optimistic outlook on the stock. The Moderate Buy analyst consensus is based on 3 Buys, 4 Holds and 1 Sell. The average price target stands at $11.64 and implies upside potential of about 3.9% to current levels. Shares have declined by 29.4% year-to-date.