On Tuesday, Evercore ISI reaffirmed its In Line rating and $22.00 price target for HP (NYSE:HPQ) Enterprise (NYSE:HPE), a prominent player in the Technology Hardware industry with a market cap of $27.7 billion, amid concerns about its pending acquisition of Juniper Networks (NYSE:JNPR). According to InvestingPro analysis, HPE is currently trading below its Fair Value, suggesting potential upside opportunity. The U.S. Department of Justice (DOJ) may consider blocking the deal, despite HPE having already obtained clearance from several international jurisdictions including the E.U., the United Kingdom (TADAWUL:4280), India, South Korea, and Australia. The company has been actively engaged with the DOJ during their review process.
HP Enterprise management recently indicated on an earnings call that they anticipate the acquisition to be finalized in the early part of 2025, which is slightly later than the initial expectation of late 2024 to early 2025. If the acquisition proceeds without DOJ objections, it is projected that JNPR could contribute approximately 5 cents to HPE's earnings per share (EPS) in fiscal year 2025, which would amount to roughly a 2% increase, and potentially a 10% increase in the longer term.
The deal includes significant termination fees, with Juniper Networks liable for $407.5 million if it accepts a superior offer, while HP Enterprise would be required to pay $815 million if the deal falls through. The near-term focus for investors is likely to be on whether HPE can secure DOJ approval for the acquisition.
HP Enterprise reported strong financial results for the October quarter, with revenue climbing to $8.46 billion, a 15.1% increase year-over-year, and non-GAAP EPS of $0.58, surpassing consensus expectations. The company's robust performance is reflected in its impressive 48.8% total return over the past year, while maintaining a conservative P/E ratio of 11.0. InvestingPro subscribers have access to 8 additional analyst insights and comprehensive financial metrics that provide deeper understanding of HPE's growth trajectory. Growth was observed across several segments, including a notable 32% increase in server revenue and an 18% growth in hybrid cloud revenue. However, the Intelligent Edge segment saw a 20% decline. The company also reported a substantial backlog of $3.5 billion in AI systems orders.
For the January quarter, HP Enterprise forecasts mid-teens percentage revenue growth year-over-year, aligning with consensus estimates of $7.78 billion, and non-GAAP EPS between $0.47 and $0.52, which is in line with expectations. HPE has not provided a formal financial outlook for fiscal year 2025 but plans to do so once the Juniper Networks acquisition is completed. With analysts projecting EPS of $2.26 for FY2025 and the company maintaining dividend payments for 10 consecutive years, HPE demonstrates strong fundamentals. Discover more detailed analysis and forward-looking metrics with a InvestingPro subscription, including exclusive access to the comprehensive Pro Research Report covering HPE's complete financial picture.
In other recent news, Juniper Networks and Hewlett Packard Enterprise (HPE) face uncertainty regarding their proposed $14 billion acquisition due to concerns of a potential Department of Justice lawsuit, as reported by Capital Forum. The EU Commission, in contrast, has already given unconditional approval to the takeover. Meanwhile, HPE announced a dividend for its preferred stockholders, set at $0.953125 per share. In a significant business move, HPE secured a contract exceeding $1 billion with Elon Musk's social media platform X to supply AI-optimized servers.
Loop Capital recently raised its price target for HPE shares to $24.00, maintaining a Hold rating. This adjustment follows a reassessment of revenue projections influenced by the successful integration of Roku (NASDAQ:ROKU) into The Trade Desk (NASDAQ:TTD)'s operations. Furthermore, Citi upgraded HPE from Neutral to Buy, increasing the price target to $26.00. The firm anticipates HPE will gain from heightened demand in mainstream server and enterprise networking markets, as well as growth in enterprise AI opportunities. These are the latest developments in the companies' operations.
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