Shares of Hewlett Packard Enterprise Co. are up 2% in Tuesday morning trading after Morgan Stanley analyst Katy Huberty upgraded the stock to overweight from equal weight. She also upgraded shares of NetApp Inc. and Teradata Corp. to equal weight from underweight; NetApp’s stock is flat, while Teradata’s stock has gained 2%. Morgan Stanley data suggest “inflecting IT budget growth” and Huberty predicts “a bull case of several years of stronger enterprise IT growth.” On HPE, she thinks that the current share price ” bakes in double-digit declines in residual value after 2019, which we believe is much too conservative given the expected growth re-acceleration, margin expansion, and increased access to cash with tax reform.” Huberty also thinks there’s room for NetApp and Teradata to beat revenue estimates and grow their margins. She sees “fewer near-term catalysts” for HP Inc. , which she downgraded to equal weight following a 62% appreciation in share price over the last 12 months. HPE shares are up 25% over that time, while Teradata’s stock is up 40% and NetApp’s is up 75%. The S&P 500 Index has gained 25% over 12 months.
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