Morgan Stanley Lowers HPE Price Target to $23 Over Memory Cycle Woes
Morgan Stanley cut its HPE price target to $23 from $25 citing cyclical moderation in memory hardware. HPE reported fiscal Q4 revenue of $9.7B (up 14% YoY), non-GAAP operating income +26% with a 12.2% margin, AI system orders totaling $6.8B, and declared a $0.953125 preferred dividend payable March 1.
1. Analyst Price Target Cut
On February 18, Morgan Stanley analyst Erik Woodring lowered HPE’s price target to $23 from $25 while maintaining an Equal Weight rating, highlighting risks of cyclical moderation in memory and off-cycle hardware segments.
2. Q4 Financial Results
HPE’s fiscal fourth quarter delivered $9.7 billion in revenue, a 14% increase year-over-year, with non-GAAP operating income rising 26% and a record operating margin of 12.2%, driven by software, services growth and disciplined cost management.
3. AI System Order Growth
The company booked $6.8 billion in AI system orders for the fiscal year, with sovereign and enterprise customers comprising over 60% of cumulative bookings since 2023, underscoring robust demand for AI-driven infrastructure.
4. Preferred Dividend Declaration
HPE’s board declared a $0.953125 per-share dividend on its 7.625% Series C Mandatory Convertible Preferred Stock, payable March 1 to record holders as of February 15, reinforcing its commitment to preferred investors.