Benzinga | Apr 20, 2021 11:44AM EDT

Could Hewlett Packard Enterprise Stock Rebound, Despite Undue Pessimism?

Despite Hewlett Packard Enterprise Co's (NYSE:HPE) stock valuation reflecting pessimism around its business prospects, the company appears poised for revenue, free cash flow, and earnings growth, according to Jefferies.

The Hewlett Packard Enterprise Analyst: Kyle McNealy initiated coverage of Hewlett Packard Enterprise with a Buy rating and a price target of $20.

The Hewlett Packard Enterprise Thesis: The current stock valuation implies that the Public Cloud migration is still in early stages, with several years of negative growth ahead for the business, McNealy said in the initiation note.

"Conversely, our analysis and our conversations with customers and VARs tells a very different story," he added.

"We see solid workload growth for the market overall coupled with narrowing headwinds from Public Cloud creating a set-up where HPE's on-premises bias is no longer a big issue. As an edge-to-cloud solutions provider with industry-leading breadth of portfolio, HPE will also continue to see growth in areas outside of core Compute & Storage businesses like HPC, WiFi 6 and 5G," the analyst wrote.

HPE Price Action: Shares of Hewlett Packard Enterprise had declined by 1.44% to $15.73 at the time of publication Tuesday.

(Photo: Hewlett Packard)