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Hewlett Packard: It’ll Take Years to Reach ‘Normal’ Margins, Says Morgan Stanley

Morgan Stanley’s Katy Huberty today reiterates an Equal Weight rating on shares of Hewlett Packard Enterprise (HPE), and an $18 price target, writing that its going to take “a number of years” for the company to improve its operating profit margin given a raft of challenges from cloud computing to startup competitors.

Huberty notes Hewlett’s operating profit was 15% back when it was still one company under CEO Meg Whitman, called Hewlett-Packard. Since then, margins have declined to 12.8% last fiscal year (ending in October), and then to just 8.8%, in the most recent quarter.

Huberty thinks Hewlett can get to a “base case normalized” operating profit margin of 13.8% by 2020, as it fights through those challenging factors.

She took a look at...


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