Hewlett Packard Enterprise (NYSE:HPE) has retreated from its year-to-date high, falling from $63.73 to a current $52.31 as it slowly carves out a double-bottom pattern ahead of earnings.
HP Enterprise is Expected to Publish Strong Earnings
HP Enterprise has become one of the biggest players in the AI industry, thanks to its various products that are widely used in data centers. It sells products in areas like storage, networking, cooling, and computing.
The company has published strong earnings results recently, as top companies in the industry boosted their spending. Its stock jumped by nearly 20% after releasing its latest results, which showed that its revenue jumped to $10.6 billion in the second fiscal quarter, up sharply from the $7.6 billion it made last year. It also made a $624 million profit.
There are signs that the company will publish strong results next week. For one, its top competitors like Lenovo and Super Micro Computer have released strong numbers. The same happened with the top spenders in the sector, including companies like Microsoft (NASDAQ:MSFT), Alphabet (NASDAQ:GOOG), and Amazon (NASDAQ:AMZN).
Benzinga data shows that the average estimate is that its revenue jumped by 30% in the quarter to $11.94 billion. Its forward guidance is that its revenue will jump by 31% to over $45 billion. Chances are that the company will release stronger-than-expected financial results.
These numbers come at a time when analysts have maintained their bullish view on the company. Morgan Stanley recently upgraded the stock to $71, while Citigroup boosted its target to $74. Goldman Sachs has a target of $79.
HP Enterprise Stock is Sending Mixed Signals
HPE stock chart | Source: TradingView
Technicals are sending mixed signals about the HPE stock ahead of its earnings. On the positive side, there are signs that it has formed a double-top pattern at $63.73 and a neckline at $40.76. This pattern suggests that the stock may drop further after its earnings report.
On the positive side, the stock has formed a cup-and-handle pattern, which normally leads to a continuation. It is now in the handle section, which may suggest a potential rebound.
Meanwhile, looking at the options market, the stock has an implied volatility of 111%, much higher than the historical figure of 50.7%. A deeper look at the data shows that most puts are concentrated at $60, up by 15% from the current level.
Most puts, on the other hand, are at $50, which is about 4.50% below the current level. In total, the volume and open interest put/call ratio are below 0.50, which is a bullish sign.
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