Hewlett Packard Enterprise and Pure Storage are Stifel’s top picks for hardware original equipment manufacturers in 2022, with the analysts expecting stronger growth in hardware infrastructure spending but cautioning that supply constraints could be a headwind.
Stifel analysts said in a note Friday that they “expect stronger growth in hardware infrastructure spending as enterprise and SMB customers resume projects delayed due to Covid” but added one obstacle they see is “supply constraints, which hurt most OEMs in the last two quarters.” They expect the supply-chain pressures to ease in the second half of 2022.
HPE, the analysts said, should “see sales growth accelerate when supply conditions ease.”
For its fiscal fourth quarter ended Oct. 31, HPE posted revenue of $7.35 billion, up 2% from a year earlier but flat after being adjusted for currency. Sales rose 7% sequentially, but were slightly below Wall Street expectations of $7.38 billion.
Fiscal-year revenue rose 3% to $27.8 billion.
Pure Storage, as well as NetApp , are companies “well-positioned to continue gaining share vs. peers, given their strong next-gen all-flash storage offerings in addition to their growing cloud-based software offerings,” Stifel analysts said.
Stifel said it expects double-digit top-line growth” at Pure Storage and “expanding margins over the next several quarters as Pure continues to gain traction with enterprise and commercial customers as well as hyper scale cloud providers.”
The analysts raised their price target on Pure Storage to $37 from $33.
Hewlett Packard Enterprise shares rose slightly on Friday to $15.90. The stock has gained 34% in 2021. Pure Storage was up 0.3% to $32.71 and has risen 45% this year.
Write to Joe Woelfel at [email protected]
