Hewlett Packard Enterprise: A Networking Transformation At A Hardware Valuation

Hewlett Packard Enterprise is rated Buy, driven by networking growth, margin expansion, and strong cash generation amid a sector-discounted valuation. Networking, now ~24% of revenue post-Juniper acquisition, is expected to deliver mid-to-high 20s operating margins and high-teens revenue growth through FY2027. Record AI-related orders, multi-billion dollar deals, and a robust backlog support HPE's FY2027 guidance: 16–20% non-GAAP EPS growth and at least $5B free cash flow.