Hewlett Packard Enterprise (NYSE:HPE) shares plunged almost 8% in pre-market Wednesday after the company reported weaker-than-expected sales for the second quarter.
Revenue came in at $7 billion (up 4% year-over-year), worse than the consensus estimate of $7.31B. HPE posted a profit per share of $0.52, compared to the consensus estimate of $0.49.
The annualized revenue run-rate increased 35% YoY (up 38% in constant currency) to $1.1B.
The company expects Q3/23 EPS in the range of $0.44-$0.48, compared to the consensus of $0.46, and revenue in the range of $6.7-$7.2B, worse than the consensus of $7.24B.
For the full year, the company expects EPS in the range of $2.06-$2.14, compared to the consensus of $2.07. Revenue growth is seen at 4-6% in constant currency.
Barclays analysts cut the price target by $2 to $16 per share on Equal Weight-rated HPE shares.
"Stepping back from the print, we continue to have a more conservative view of the traditional IT Hardware sector as we face challenging 2023 macro backdrop. We believe the traditional server/storage markets will be most impacted by the challenging macro backdrop," they wrote.
CofA analysts also remain cautious on shares.
"Reiterate Neutral on risk/reward balance as long-term mix shift to higher margin software/aaS revs is balanced by near-term weaker Enterprise spend environment and slowing orders."
Additional reporting by Senad Karaahmetovic