HPE, DELL, NTAP Stocks Downgraded, Barclays Sees No ‘Meaningful AI Inflection’

• Analyst Tim Long cut his price target on HPE to $77 from $83 and on Dell to $574 from $603, while maintaining his $219 target on NetApp.
• Barclays said it was taking a more cautious approach to IT hardware stocks tied to enterprise spending.
• It noted that higher commodity costs have supported revenue but a meaningful AI-driven growth inflection has yet to emerge.

Dell Technologies (DELL), Hewlett Packard Enterprise Co. (HPE) and NetApp (NTAP) stocks fell in pre-market trade on Wednesday after being downgraded by Barclays on valuation concerns and lack of meaningful artificial intelligence (AI) driven growth.

Analyst Tim Long lowered Barclays’ rating on all three to ‘Equal Weight’ from ‘Overweight’. He cut the price target on HPE to $77 from $83 and on Dell to $574 from $603. Long maintained Barclays’ $219 price target on NetApp.

In a note to investors cited by TheFly, Barclays said it is taking a more cautious approach on IT hardware stocks "that are more aligned with enterprise spending." It noted that while valuations have moved up significantly and commodity costs have helped revenues, "we don't see a meaningful AI inflection yet," the analyst wrote. 

HPE stock fell nearly 4% in the pre-market trade, while NTAP and DELL shares fell nearly 3%. On Stocktwits, retail sentiment around HPE and DELL continued to trend in ‘bearish’ territory over the past day. Sentiment around NTAP joined the cohort, dropping to ‘bearish’ from the ‘neutral’ zone over the past day. 

DELL stock was also among the top trending tickers on Stocktwits at the time of writing.

Barclays Targets Point To Limited Upside For HPE, Dell

The downgrades come after substantial gains in all three stocks over the past year. HPE stock has climbed about 177%, while Dell stock has gained approximately 273%. NetApp shares have advanced around 101%.

According to Koyfin data, HPE has a 12-month average analyst price target of $72.03, implying 4.6% upside potential from its current price of $68.81. 

Dell’s average target of $594.16 suggests 3.8% upside from $572.47. NetApp, however, trades above its average target of $211.69, implying 11.4% downside from $239.01.

Barclays’ revised price targets paint a more cautious picture for HPE and Dell. Its $77 target for HPE implies 11.9% upside from Tuesday’s close, while its $574 target for Dell offers just 0.3% upside. For NetApp, Barclays’ unchanged $219 target implies 8.4% downside, less harsh than the Wall Street average.

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