HP Enterprise: Long-Term Tailwinds and Short-Term Softness at Mixed Analyst Day; Maintain Valuation

We maintain our $16 fair value estimate for shares of no-moat HP Enterprise following its 2023 analyst day. The firm put forth positive long-term targets but weaker short-term guidance than we expected. The theme of the event was a focus on increasing its total addressable market in edge & networking, hybrid cloud, and artificial intelligence segments through organic and inorganic opportunities. It asserted its focus on HPE GreenLake as a key driver of gross margin expansion as well as strong annual recurring revenue growth. The firm cited challenges in the next year, however, and provided a conservative 2024 outlook. Despite shares falling on the weak guide, we maintain our long-term forecasts and view shares as fairly valued.