HPE Shares Drop 9% After Evercore Downgrade Cites Valuation

Hewlett Packard Enterprise shares fell sharply on Monday after Evercore ISI downgraded the stock, citing its valuation following a massive rally. The decline was also pressured by a broader selloff in artificial intelligence-linked stocks. The technology company's stock dropped approximately 9% in Monday trading. The move came after Evercore analyst Amit Daryanani cut his rating on HPE to In Line from Outperform, while maintaining a $65 price target. The downgrade was not based on deteriorating business fundamentals but on the stock's valuation after a 158.5% year-to-date gain. Evercore noted that HPE now trades at about 13 times projected fiscal 2027 earnings, compared with a five-year average near 8 times. "Given the stock now trading at 13x FY27 PE versus its five-year average of 8x... we believe shares are fairly valued at current levels," Daryanani wrote in a note to clients. The firm credited HPE management with strong execution during the first year of integrating Juniper Networks. The downgrade followed HPE's record fiscal third-quarter results reported on September 2. The company posted revenue of $12.2 billion, up 34% year-over-year, and adjusted earnings of $1.