Citi upgrades HP Enterprise to Buy on AI momeumtum

Citi upgraded HP Enterprise (HPE) to Buy from Neutral with a price target of $26, up from $23. The firm expects the company to benefit from improving demand in mainstream server and enterprise networking, expanding enterprise artificial intelligence opportunities and a narrowing valuation gap versus peers. HP Enterprise’s fiscal Q4 results beat estimates, and while AI orders “can be lumpy,” there is potential for stronger contribution from enterprise AI and sovereigns, “which bodes positively for revenue momentum and margins ahead,” the analyst tells investors in a research note. Citi says that when coupled with an improving demand outlook in core enterprise infrastructure spending and potential accretion from the Juniper (JNPR) acquisition, it is “increasingly more constructive” on the shares.