Hewlett Packard Enterprise shares dropped nearly 11% after Evercore ISI cut its rating from outperform to in-line. Analyst Amit Daryanani kept his $65 price target but flagged HPE's valuation as stretched following the stock's sharp 2026 run.
The tech hardware company's shares slumped by nearly 11% and closed at $55.41, down $6.68 on the session, after Evercore ISI's Amit Daryanani downgraded the stock. He moved his rating from outperform to in-line, the equivalent of a hold, in a call made Sunday.
A valuation call, not a business one
Daryanani left his $65 price target untouched even as he cut the rating. The change reflected HPE's recent share-price appreciation, which pushed its forward price-to-earnings ratio to roughly 13 times, a level Daryanani said sits well above the company's five-year average. He still credited management with strong execution but said he sees few catalysts left to lift the fundamentals much further.
The downgrade landed after a run that had made HPE one of the year's stronger performers. The stock had climbed roughly 159% year-to-date through September 11, driven by demand for AI-optimized servers and a Juniper Networks acquisition that had gone well.
Low-margin AI hardware weighs on the outlook
Daryanani also pointed to a low-margin issue: he expects HPE's returns on artificial intelligence hardware to weigh on profitability even as demand for that gear stays strong. That concern came alongside a market cap of roughly $82 billion. Trading volume hit 31.2 million shares, above HPE's average of 21.4 million.
Business fundamentals remain intact
The company's underlying results still look solid. HPE's revenue reached $12.21 billion for the July quarter, a 33.7% jump year-over-year, and management raised its full-year guidance on the back of that growth. The Juniper Networks deal gave HPE a networking business to pair with its server and storage lines, letting it sell a fuller stack to enterprise customers.
At $55.41, HPE now trades about 15% below Evercore's maintained $65 target, leaving the stock's next move tied to whether new catalysts emerge to justify a return to its prior valuation.
Sources: Motley Fool, Crypto Briefing
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