Hewlett Packard Enterprise Co (NYSE:HPE, ETR:2HP) shares fell 8% on Thursday morning following the company’s release of its fiscal year 2026 financial guidance, which fell short of Wall Street expectations.
For fiscal 2026, HPE projected revenue growth of 5% to 10%, significantly below analysts’ consensus estimates of about 17%.
The company also guided non-GAAP diluted earnings per share (EPS) of $2.20 to $2.40, at the midpoint slightly under the Street consensus of $2.40.
GAAP diluted net EPS is expected to range between $0.57 and $0.77, excluding potential gains or losses from the disposition of its remaining interest in H3C.
Free cash flow for the year is projected at $1.5 billion to $2 billion.
Despite the cautious near-term outlook, HPE reiterated its long-term growth targets.
Through fiscal 2028, the company expects revenue to grow at a compound annual rate of 5% to 7%, non-GAAP operating profit growth of 11% to 17%, and non-GAAP diluted EPS of at least $3.
HPE also aims to generate more than $3.5 billion in free cash flow by fiscal 2028.
The company is in the midst of a strategic shift, focusing on higher-growth and higher-margin businesses, including AI infrastructure, hybrid cloud solutions through GreenLake, and networking following its Juniper Networks acquisition.
In a statement, management emphasized profitable growth and structural cost savings through initiatives such as the Catalyst program, targeting improved efficiency by 2028.
“By aligning our investments and innovation to address the IT industry’s most promising opportunities in networking, cloud, and AI, we’re poised to gain share in the markets that matter most to our customers,” HPE CEO Antonio Neri said.
“In HPE’s new chapter, our strengthened portfolio will create more profitable growth, increasing capital return opportunities that deliver even greater value to our shareholders.”