Hewlett Packard Enterprise Co.'s (HPE) thinner margin structure and lower services revenue make it more vulnerable to trade tariffs, Morgan Stanley said in a research note Tuesday.
The Wall Street firm downgraded Hewlett Packard shares to equal-weight from overweight, while reducing its price target to $14 from $24.
"Our upgrade of HPE in December was based on accretion from the impending close of JNPR, which has been put on pause for now until DOJ trial in late summer," Morgan Stanley said.
"In the interim, thinner margin structure of HPE would provide less of a buffer to estimated tariffs, leaving us EW for now," the firm said
Morgan Stanley said its assessment could become more more positive in a few months once there is more clarity on the permanency and macro impact of tariffs and the Justice Department trial to block the proposed acquisition of Juniper Networks gets closer.
Price: 13.61, Change: +0.28, Percent Change: +2.06
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