HPE: What did we learn from HPE's Networking day?

HPE held its Networking day in Sunnyvale today. We summarize key points from the event. HPE significantly increased its Networking revenue growth target from 6% to high teens% (3-year CAGR), more in-line with the market. At last year's Securities Analyst Meeting (in October), the company outlined its growth target of 5-7% CAGR (FY25-28), which at the time was disappointing and slower than the market; this was just increased to high-teens% CAGR (FY26-29). Because HPE is over-indexed to the low-growth segments like Campus & Branch and under-indexed to the highest growth segment of Datacenter networking, this implies that HPE is taking share. Within Networking, the company expects Datacenter to grow the fastest (low to high 50s%), followed by Routing (low to high 20%) and Campus & Branch and Security (HSD%, respectively). Networking operating margin target for FY27-29 remained unchanged at mid to high 20s%. However, cost synergies from Juniper have been increased from $600M to $800M. HPE