Barclays Downgrades Dell, HPE and NetApp on Valuation Concerns
The bank cut its ratings on all three hardware companies, citing rich valuations and a lack of a significant AI breakthrough so far.
Key takeaways
- Barclays lowered its ratings on Dell, HPE and NetApp to Equal-weight.
- The bank cited high valuations and a lack of a significant AI breakthrough.
- Barclays cut its price targets for Dell and HPE but kept NetApp’s unchanged.
Barclays lowered its ratings on Dell Technologies, Hewlett Packard Enterprise and NetApp to Equal-weight, citing high valuations and a lack of a significant AI breakthrough. The three stocks fell in trading.
As of 14:44 UTC, Dell traded at $526.67, down 8% from its previous close. HPE was at $65.63, down 4.62% as of 14:43 UTC, while NetApp was at $230.86, down 3.41% as of 14:42 UTC.
Barclays analyst Tim Long said the bank was taking a more cautious view of IT hardware companies tied to corporate spending. Barclays also said it did not see a significant breakthrough in AI development so far. Higher-than-expected U.S. consumer prices added pressure on interest-sensitive technology shares, according to the report.
The bank cut its Dell price target to $574 from $603 and its HPE target to $77 from $83, according to Investing.com. It left NetApp’s target at $219. For HPE, the downgrade reflected valuation, not a change to the bank’s financial forecasts.
Barclays expects smaller earnings surprises at Dell, which could limit further upside, the report said. Its model projects Dell’s AI server revenue at $75 billion in fiscal 2027 and $100 billion in fiscal 2028, with growth momentum easing.
This article was produced with the help of AI technology. Based on reporting by the outlets listed above.
