HP Enterprise slips as Evercore ISI downgrades on worries over slowing growth
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HP Enterprise (NYSE:HPE) shares fell fractionally in premarket trading on Thursday as Evercore ISI downgraded the technology company, citing concerns that growth may slow as the economy gets weaker. 
Evercore ISI analyst Amit Daryanani lowered his rating on HP Enterprise (HPE) shares to in-line from outperform, but kept the per-share price target of $18, noting that there is an expectation of "moderating" IT spend in 2023, with growth expected to slow to a range of 3% to 5% year-over-year. 
"Furthermore, we think budgets will remain more muted in [the first-half] before improving in [the second-half]," Daryanani wrote in a note to clients.
Daryanani added that HP Enterprise (HPE) has already cited weakness in budgeting and order processes, but the company has performed better than its peers due to a strong momentum in its order book and pipeline.
The analyst also noted that worries over the "true demand" compared to HP Enterprise's (HPE) backlog have persisted, especially as its backlog fell by mid-single digits in its most recent quarter.
Other issues that also factored into the downgrade include expectations that the server market will moderate in 2023, with revenue expected to be up just 2.7%, compared to 13.5% growth in 2022.
"We think 2023 is evenly balanced between a relatively optimistic full year guide (supported by a healthy backlog) and macro uncertainty impacting IT spend as well as [acceptable use policy] growth moderating (servers in particular)," Daryanani added, while also noting that the stock looks "expensive" when compared to other competitors like Cisco (CSCO).
On Tuesday, Barclays downgraded HP Enterprise (HPE) as it forecast 2023 to be a "challenging" environment.
Analysts are largely bullish on HPE Enterprise (HPE). It has a BUY rating from Seeking Alpha authors, while Wall Street analysts rate it a BUY. Conversely, Seeking Alpha's quant system, which consistently beats the market, rates HPE a HOLD.