Hewlett Packard Enterprise Shares Down Today: What's Going On?

Hewlett Packard Enterprise Co HPE shares are trading lower after it chalked out long-term and FY24 outlook at its recent investor day. 

FY23 outlook: HPE reaffirms the outlook for revenue growth at 4%-6%, adjusted EPS at $2.11-$2.15 (vs. consensus of $2.14), and FCF at $1.9 billion-$2.1 billion.

On the other hand, the company lowered the adjusted operating profit growth outlook to about 4% (vs. 6%-7% prior).

FY24 guidance: The company guided revenue growth of 2%-4% in constant currency, adjusted operating profit growth of approximately 3%-5%, and adjusted EPS of $1.82-$2.02 (vs. consensus of $2.14).

HPE targets FCF of $1.9 billion-$2.1 billion and an 8% increase in dividend per share in FY24. 

Long-Term Expectations: For FY24-FY26, HPE anticipates revenue growth of 2%-4% in constant currency and a compounded annual growth rate for annualized revenue run-rate of 35%-45%.

Also, the company intends to return 65%- 75% of free cash flow to shareholders over the next three years vs. historical target rates of 50%-60%.

The company is accelerating its portfolio shift to higher-growth, higher-margin businesses and expects its largest growth businesses (Intelligent Edge, HPC & AI, and future Hybrid Cloud segment) to exceed 50% of its total segment revenue by FY26. 

Apart from this, HPE is investing to drive recurring revenue and boost margins, thereby enhancing its total addressable market by nearly $100 billion over four years to over $340 billion, led by a larger market in AI.

"With a growing addressable market, a proven strategy, and a differentiated portfolio, HPE is in a strong competitive position. HPE's strategy is aligned to significant market trends around edge, hybrid cloud and AI – all of which create profitable market expansion opportunities that we expect will fuel our growth. As we unlock greater growth from these markets, our investors are poised to share in higher returns," said Antonio Neri, president and CEO.

In August, HPE reported Q3 EPS of $0.49, beating the estimate of $0.47, and sales of $7.00 billion surpassing the consensus of $6.99 billion.

Price Action: HPE shares are down 3.87% at $15.67 premarket on the last check Friday.