HPE Earnings: Full-Year Outlook Suffers, but We See Mostly Temporary Issues

No-moat-rated Hewlett Packard Enterprise reported fiscal first-quarter results that largely met our expectations, with adjusted EPS of $0.49 versus our expectation of $0.50. However, the updated full-year outlook was a bit of a shocker, as HPE announced a new cost-cutting program, impacts from tariffs, and unexpected margin pressure. As we sort through these, our impression is that these are temporary issues. After updating our forecasts, we expect a rough second and third quarter, but a recovery in the fourth quarter, putting HPE back on track with our original expectations.