HPE Shares Fall 8% After Evercore Downgrades Stock

Hewlett Packard Enterprise shares fell 8% on Monday after Evercore ISI downgraded the stock to In Line from Outperform. The brokerage kept its $65 price target. HPE closed at $62.08 on Sept. 11 after a 15% gain over the prior five trading days.

Evercore said the downgrade reflected the stock’s rapid rally and a tighter risk-reward profile. The firm noted HPE had risen 158.5% year to date, versus an 11.9% gain for the S&P 500, and was up 37.6% in the third quarter while the benchmark gained 2.1%.

Valuation was a key factor. Evercore wrote that the stock was trading at about 13 times projected fiscal 2027 earnings compared with a five-year average of eight times, and roughly 14 times EV/27 free cash flow. “Given the stock now trading at 13x FY27 P/E versus its five-year average of 8x and 14x EV/27 FCF, in line with its historical average, we believe shares are fairly valued at current levels,” Amit Daryanani wrote.

The firm credited HPE management with strong execution during the first year after the Juniper Networks acquisition and noted improving supply conditions. Evercore said HPE shares have gained about 192% since the Juniper deal closed and that networking contributes more than half of the segment’s operating profit.

Evercore also flagged potential headwinds to further multiple expansion. Networking orders rose 36% in the July quarter, while pro forma networking revenue increased about 10%, trailing peer gains. “From here, however, we see a tougher setup,” the firm wrote. “With risk/reward more balanced at current levels, we are moving to the sidelines with an In Line rating.”

The brokerage identified three developments that could prompt a more constructive view: continued Juniper integration that leads to higher margins; a shift in HPE’s business mix toward higher-margin networking rather than lower-margin cloud and AI activities; and measurable benefits from the Helios initiative, which Evercore expects to emerge in fiscal 2027 and 2028.

Investors will watch upcoming quarters for margin improvement, stronger networking revenue growth and clearer evidence that Helios contributes to profitability.