FXEMPIRE
All
Ad
Corona Virus
Stay Safe, FollowGuidance
World
43,062,591Confirmed
1,156,270Deaths
31,742,791Recovered
Fetching Location Data…
Advertisement
Advertisement
Vivek Kumar

Hewlett Packard Enterprise Co, an American multinational information technology company based in California, announced to acquire the global SD-WAN leader Silver Peak for about $925 million in cash.

Silver Peak will be combined with Hewlett Packard Enterprise’s Aruba business unit and will extend Aruba’s technology leadership in the large and fast-growing SD-WAN space. The combination is anticipated to drive significant revenue opportunities and to be accretive to Intelligent Edge segment revenue growth and gross margin, the company said.

Hewlett Packard Enterprise (HPE) expects that the market for SD-WAN will grow from $2.3 billion in 2020 to $4.9 billion in 2024, which will be +20.5% CAGR.

Executives’ comments

“HPE was an early mover in identifying the opportunity at the edge and that trend is accelerating in a post-COVID-19 world,” said Antonio Neri, president and CEO of HPE.

“With this acquisition we are accelerating our edge-to-cloud strategy to provide a true distributed cloud model and cloud experience for all apps and data wherever they live. Silver Peak’s innovative team and technology bring critical capabilities that will help our customers modernize and transform their networks to securely connect any edge to any cloud.”

“Bringing together Silver Peak’s advanced SD-WAN solutions with Aruba’s industry-leading networking portfolio provides an unprecedented opportunity to deliver a comprehensive business-driven solutions to our customers,” said David Hughes, founder and CEO of Silver Peak.

“The Silver Peak and Aruba teams share a common vision and goal to provide simplicity, scalability, and application-awareness at the edge. With Aruba’s extensive go-to-market, we will further accelerate our ability to drive faster adoption of these transformational technologies. We are excited for the opportunities we will have as a combined team to accelerate innovation in this fast-growing segment of the networking market.”

Advertisement

Hewlett Packard stock forecast

Thirteen analysts forecast the average price in 12 months at $10.05 with a high forecast of $13.00 and a low forecast of $8.00. The average price target represents a 6.46% increase from the last price of $9.44. From those 13, one analyst rated ‘Buy’, ten rated ‘Hold’ and two rated ‘Sell’, according to Tipranks.

Morgan Stanley target price is $9 with a high of $14 under a bull scenario and $6 under the worst-case scenario. In May, JP Morgan lowered the target price to $11 from $12; Oppenheimer cuts price target to $13 from $15; UBS lowered the target price to $10 from $13, while Jefferies raised target price to $20 from $17. We expect it is good to sell as 50-day Moving Average and 100-200-day MACD Oscillator signals a selling opportunity.

Analyst view on the acquisition

“Hewlett Packard Enterprise is acquiring SD-WAN provider Silver Peak which is levered to growing adoption of cloud and remote work applications. We like the strategic rationale and growth/margin profile however the small revenue contribution unlikely drives the transformational change that investors look for,” said Katy L. Huberty, equity analyst at Morgan Stanley.

“Weak on-premise IT spend pressured by COVID-19 and worse-than-expected profitability during disruption drive another significant cost-cutting plan, after executing on HPE Next. Incremental restructuring and limited visibility on backlog conversion keeps us on the sidelines despite a discount versus other enterprise IT peers,” she added.

The company holds high-quality assets but seems unlikely to move the needle on Hewlett Packard Enterprise growth in the medium-term. Silver Peak’s WAN solutions deliver significant cost savings and application performance. Morgan Stanley expects the deal to make strategic sense given the complementary TAM expansion, revenue synergies and accretive gross margin.

However, Morgan Stanley also recognizes that the deal contributes only low single digits to HPE revenue by FY22, which falls short of investors’ hopes for a transformational deal that can drive conviction in HPE’s ability to sustainably grow along the top line.

Don't miss a thing!
Discover what's moving the markets. Sign up for a daily update delivered to your inbox

Trade With A Regulated Broker

  • Your capital is at risk
IMPORTANT DISCLAIMERS
The content provided on the website includes general news and publications, our personal analysis and opinions, and contents provided by third parties, which are intended for educational and research purposes only. It does not constitute, and should not be read as, any recommendation or advice to take any action whatsoever, including to make any investment or buy any product. When making any financial decision, you should perform your own due diligence checks, apply your own discretion and consult your competent advisors. The content of the website is not personally directed to you, and we does not take into account your financial situation or needs.The information contained in this website is not necessarily provided in real-time nor is it necessarily accurate. Prices provided herein may be provided by market makers and not by exchanges.Any trading or other financial decision you make shall be at your full responsibility, and you must not rely on any information provided through the website. FX Empire does not provide any warranty regarding any of the information contained in the website, and shall bear no responsibility for any trading losses you might incur as a result of using any information contained in the website.The website may include advertisements and other promotional contents, and FX Empire may receive compensation from third parties in connection with the content. FX Empire does not endorse any third party or recommends using any third party's services, and does not assume responsibility for your use of any such third party's website or services.FX Empire and its employees, officers, subsidiaries and associates, are not liable nor shall they be held liable for any loss or damage resulting from your use of the website or reliance on the information provided on this website.
RISK DISCLAIMER
This website includes information about cryptocurrencies, contracts for difference (CFDs) and other financial instruments, and about brokers, exchanges and other entities trading in such instruments. Both cryptocurrencies and CFDs are complex instruments and come with a high risk of losing money. You should carefully consider whether you understand how these instruments work and whether you can afford to take the high risk of losing your money.FX Empire encourages you to perform your own research before making any investment decision, and to avoid investing in any financial instrument which you do not fully understand how it works and what are the risks involved.
FOLLOW US