HPE Stock Plunges 36% in 3 Months: Should You Buy, Sell or Hold?

Core Viewpoint - Hewlett Packard Enterprise (HPE) has experienced a significant decline in stock price, losing 36.1% over the past three months, which is notably worse than the declines seen in the Zacks Computer - Integrated Systems industry, Zacks Computer and Technology sector, and the S&P 500 index [1][4]. Group 1: Stock Performance and Market Conditions - HPE's stock underperformance is attributed to broader market weakness and deteriorating investor sentiment due to rising trade tensions and fears of escalating costs from additional tariffs [4][5]. - The company's manufacturing facilities are concentrated in countries like China and Mexico, which have been impacted by tariffs imposed by the Trump administration, leading to increased component costs and margin pressure [5]. Group 2: Earnings and Financial Performance - HPE missed its fiscal first-quarter earnings expectations due to unexpected pricing pressures from aggressive discounting on traditional servers and a normalization of post-pandemic backlog orders in its high-margin Intelligent Edge division [6]. - In fiscal 2024, HPE reported an increase of $135 million in charges related to acquisitions, primarily due to costs associated with the pending acquisition of Juniper Networks, which is expected to undermine HPE's earnings performance [11]. Group 3: Regulatory Challenges - The U.S. Department of Justice (DOJ) has raised concerns regarding HPE's acquisition of Juniper Networks, filing a lawsuit to block the merger on the grounds that it may eliminate competition and stifle innovation in the networking market [10]. - The networking market is currently dominated by a few key players, including HPE, Juniper Networks, Arista Networks, and Cisco, which adds to the competitive pressures faced by HPE [7][8]. Group 4: Investment Recommendation - Given the challenges related to rising costs from tariffs and regulatory hurdles in the acquisition of Juniper Networks, it is suggested that investors consider selling HPE stock at this time [12].