Hewlett Packard Enterprise (NYSE:HPE) shares dropped more than 3% on Monday after analysts raised concerns about the company’s near-term growth trajectory.
Raymond James downgraded the stock from “Strong Buy” to “Outperform,” citing softer growth expectations while maintaining a constructive long-term view.
The firm said the move reflects “less certainty around growth and catalysts,” even as it continues to see value in the shares. “We continue to see significant upside to the share price and consider it an attractive value stock,” the analysts noted.
HPE’s Cloud & AI division, previously seen as a key engine for expansion, has underdelivered relative to expectations. Analysts pointed out that the company’s emphasis on profitability over market share—particularly in artificial intelligence—has limited its exposure to large-scale AI deployments, weighing on overall growth potential.
Raymond James added that while the networking segment shows promise, especially in data center infrastructure linked to AI workloads, performance has yet to fully meet expectations. Weakness in campus networking and integration challenges tied to Juniper Networks have also constrained progress.
The brokerage lowered its financial forecasts for HPE, highlighting uncertainty around demand trends, pricing sensitivity, and supply chain issues, including memory shortages.
It also trimmed its price target slightly to $29 from $30, implying only modest upside from current levels.
Despite the downgrade, analysts said the company’s valuation remains attractive, with forward price-to-earnings multiples below many peers. However, they stressed that valuation alone is not enough to support a more bullish stance without clearer growth drivers.
Looking ahead, Raymond James expects HPE to deliver mid-single-digit revenue growth in the coming years, with stronger upside dependent on successful execution of its AI and “as-a-service” strategies.