Hewlett Packard Enterprise (HPE) shares jumped early Tuesday as the information technology firm lifted its full-year outlook and reported stronger-than-expected fiscal second-quarter results.
The company now anticipates adjusted earnings to be in a range of $3.35 to $3.45 per share for fiscal 2026, it said late Monday, up from its previous guidance of $2.30 to $2.50. The current consensus on FactSet is for non-GAAP EPS of $2.92.
Revenue is now pegged to grow by 29% to 33% for the ongoing fiscal year, compared with the firm's prior projections for a 17% to 22% increase. The Street is looking for sales of $43.72 billion. The stock surged 25% in the most recent premarket activity.
"Based on our performance, we are raising our fiscal 2026 guidance and introducing a fiscal 2027 financial growth framework," Chief Financial Officer Marie Myers said in the earnings release. "These updates reflect the durability of our performance and continued operational excellence - and point to faster progress toward our long-term financial plan."
For fiscal 2027, Hewlett Packard expects adjusted EPS to rise by 12% to 16% on revenue growth of 8% to 12%. The current average analyst estimate on FactSet is for non-GAAP EPS of $3.38 and sales of $46.8 billion for fiscal 2027.
For the three months through April 30, Hewlett Packard's adjusted EPS advanced to $0.79 from $0.38 a year earlier, surpassing the Street's view for $0.53. Revenue climbed 40% to $10.68 billion, exceeding the market's forecast of $9.78 billion.
"Demand was even stronger than revenue growth," Chief Executive Antonio Neri said during a conference call, according to a FactSet transcript. "Orders more than doubled, significantly outpacing revenue, resulting in a record company backlog."
Revenue in the cloud and artificial intelligence segment inclined 23% to $7.71 billion. "Strong order activity and pass through of higher costs on new orders in traditional server and storage drove the upside, partially offset by supply constraints and timing of AI server shipments," Myers told analysts. The networking business recorded revenue of $2.69 billion, up from $1.08 billion in the prior-year quarter.
"The biggest takeaway from the quarter was that (Hewlett Packard) is benefiting from the same pricing dynamic that has recently driven upside at (Dell Technologies)," Morgan Stanley said in a note emailed toon Tuesday. "Customers are absorbing materially higher server prices with little evidence of demand destruction."
Last week, Dell raised its fiscal 2027 outlook after posting record first-quarter results that topped Wall Street's estimates amid surging demand for AI-optimized servers.
For the ongoing quarter, Hewlett Packard projects adjusted EPS to come in between $0.88 and $0.93 on a revenue range of $11.5 billion to $12.1 billion. The Street is looking for non-GAAP EPS of $0.76 and sales of $11.39 billion.
"We are taking up our outlook on the back of (second-quarter) results and greater visibility into the second half demand environment," Myers said on the call.
