Citi Rates Hewlett Packard (HPE) as a Buy After Juniper Acquisition

Hewlett Packard Enterprise Company (NYSE:HPE) is one of the 10 Best Tech Stocks Under $50 To Invest In. On July 25, Citi resumed coverage of Hewlett Packard Enterprise Company (NYSE:HPE), giving the stock a “Buy” rating and setting the price target at $25.

The firm highlighted benefits from the company’s acquisition of Juniper Networks. According to Citi analysts, this acquisition positions Hewlett Packard Enterprise Company (NYSE:HPE) favorably to benefit from growth in AI, enterprise networking, and edge computing.

Citi expects the $600 million in operating expense synergies identified by Hewlett Packard Enterprise Company (NYSE:HPE), up from the previous estimate of $450 million, to grow earnings per share by about 15%.

The research firm pointed out that about 50% of Hewlett Packard Enterprise Company’s (NYSE:HPE) operating income now comes from the higher-margin networking segment, up from the previous 35%. Because of this, Citi analysts believe a price-to-earnings (P/E) ratio of 10 times for the company’s earnings in fiscal 2024 is fair, which is higher than the median P/E ratio of 8 times.

Citi also sees potential for more revenue growth as Juniper products are integrated into Hewlett Packard Enterprise Company’s (NYSE:HPE) global sales channels. The firm expects the company to reduce debt by using the free cash flow generated in the coming years.

Hewlett Packard Enterprise Company (NYSE:HPE) is a global technology company that specializes in essential enterprise technology, AI, cloud, and networking. The company offers intelligent solutions for organizations to manage and utilize their data.

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Disclosure: None. This article is originally published at Insider Monkey.