$69 is Morgan Stanley's new Overweight price target for Hewlett Packard Enterprise (NYSE: HPE), assigned August 13, 2026, after shares closed at a 52-week high of $58.79 on August 12 and then opened at $61.37, up 4.38%. The upgrade arrives on the back of a 159.3% year-to-date gain and a 188.9% return over the past year, with the firm citing hardware demand from AI infrastructure spending. The fundamental driver is a Q2 FY26 earnings acceleration that landed two months before the upgrade.
Q2 FY26: the inflection
Revenue of $10.68 billion and non-GAAP EPS of $0.79, reported June 1, 2026, came in well above the company's own guidance of $0.51 to $0.55 on earnings. Networking revenue jumped 148.2% as Juniper Networks integration gains arrived ahead of schedule. Server revenue tied to AI infrastructure grew 32.7%. Non-GAAP operating margin expanded 530 basis points year over year, from 8.0% to 13.3%.
That quarter forced a two-year pull-forward on cash generation targets. Management raised FY26 free cash flow guidance to at least $3.5 billion, a figure that had originally been the FY28 target. The FY27 framework calls for 12% to 16% non-GAAP EPS growth and free cash flow of at least $4.5 billion. CEO Antonio Neri attributed the acceleration to customer investment in AI infrastructure and the combined networking portfolio following the Juniper acquisition.
The valuation math
The trailing P/E of 1,263 is a distortion, not a description. A $1.621 billion goodwill impairment charge tied to the Juniper Networks deal accounts for it. Strip that charge and Alpha Vantage pegs the forward P/E at 14 with a PEG ratio of 0.851. Against raised FY26 non-GAAP EPS guidance of $3.35 to $3.45, a stock at $61 sits roughly in line with broad-market multiples on a forward basis, even after a quarter in which revenue grew 40% year over year.
| Metric | Value | Label |
|---|---|---|
| Q2 FY26 non-GAAP EPS | $0.79 | Reported |
| Q2 FY26 EPS guidance (high end) | $0.55 | Reported |
| Non-GAAP operating margin, Q2 FY26 | 13.3% | Reported |
| Non-GAAP operating margin, Q2 FY25 | 8.0% | Reported |
| Forward P/E (Alpha Vantage) | 14x | Projected |
| FY26 FCF guidance | $3.5B+ | Projected |
| FY27 FCF target | $4.5B+ | Projected |
| Morgan Stanley price target | $69 | Projected |
| Analyst consensus target | $65.45 | Projected |
Risk factors
Insiders are net sellers across 38 recent transactions. The 200-day moving average sits at $30.66, putting the stock at roughly double its long-term trend line. A beta of 1.436 means drawdowns arrive sharper than the broader tape. Analyst consensus stands at $65.45 across 13 buy ratings and 9 holds, with zero sells. Morgan Stanley's $69 is already above that crowd. Q3 FY26 revenue guidance of $11.5 billion to $12.1 billion is the next hard test.