HPE delivers above-consensus Q4 results, in-line guidance; shares up

Hewlett Packard Enterprise Co (NYSE:HPE) shares rose over 1% in premarket trading Friday as the company reported modestly better-than-expected fourth-quarter results and provided roughly in-line guidance for the upcoming quarter.

The enterprise technology solutions provider posted adjusted earnings per share of $0.58, surpassing the analyst consensus of $0.56. Revenue for the quarter reached a record $8.5 billion, up 15% YoY and exceeding the $8.26 billion estimate.

HPE’s strong performance was driven by robust growth in its server and hybrid cloud segments. Server revenue jumped 32% YoY to $4.7 billion, while hybrid cloud revenue increased 18% to $1.6 billion.

“HPE delivered an exceptional fourth quarter with record quarterly revenue, capping off a strong FY 2024,” said Antonio Neri, president and CEO of Hewlett Packard Enterprise. “Our differentiated portfolio across hybrid cloud, AI, and networking positions us well to capitalize on the market opportunity.”

Looking ahead, HPE expects Q1 2025 adjusted EPS between $0.47 and $0.52, compared to the $0.48 consensus. The company also anticipates mid-teens percentage revenue growth YoY for the upcoming quarter.

Bernstein analysts maintained a Market Perform rating on HPE shares, and lifted its price target from $19 to $21.

“While we believe HPE could tactically benefit from revenue upside from strong AI shipments over the next few quarters, the company continues to be a #3 or #4 provider and profitability remains a key question,” analysts led by Toni Sacconaghi said in a note.

“While HPE screens as inexpensive, we worry about ongoing pressure on FCF, and continue to struggle with the Juniper acquisition, and for now we sit on the sidelines. On net, we view risk/reward as relatively neutral.”

Similarly, Wells Fargo (NYSE:WFC) analysts reiterated an Equal Weight rating and a $22 price target on HPE. The bank expects AI lumpiness and backlog de-book, alongside the Juniper deal and traditional server recovery “to be [the] key focus” going forward. 

Senad Karaahmetovic contributed to this report.