To The Moon

HPE’s stock surged over 11% following news of the U.S. Justice Department settling its antitrust case, clearing the path for its $14 billion acquisition of Juniper Networks. That kind of immediate reaction suggests investors see this as a transformative move.

$Hewlett Packard Enterprise(HPE)$ can provide a strong stock rally after the US Justice Department settles the antitrust case for its $14 billion takeover of $Juniper Networks(JNPR)$. In fact, market reactions have already been positive.

In this article, I would like to discuss why the market reaction have supported that and have been positive.

Here are some of the factors which might have contributed to the positive reaction.

Uncertainty Removed: The antitrust lawsuit was a major hurdle for the acquisition. With the settlement, this significant uncertainty is removed, allowing the deal to proceed. Markets generally react favorably to the resolution of such large regulatory obstacles.

Immediate Stock Jump: As reported, HPE shares surged by around 11-13% and Juniper Networks (JNPR) shares rose over 8% immediately after the news of the settlement. This indicates strong investor confidence.

Strategic Rationale: The acquisition of Juniper is seen as a strategic move for HPE to enhance its AI-native networking solutions and accelerate growth in AI data centers, service providers, and cloud segments. Juniper's Mist AI platform, in particular, is considered a key asset.

Competitive Positioning: The combined entity is expected to offer a strong alternative to legacy networking solutions, positioning HPE to better compete with rivals like Cisco, especially in the growing AI and hybrid cloud markets.

Synergy Potential: Analysts project that the synergies from the acquisition, including cost rationalization and AI integration, could boost HPE's earnings per share (EPS) by 8-14% by 2026.

Reasonable Valuation: Despite the recent jump, some analysts still consider HPE's stock to be reasonably priced, trading at a lower P/E ratio compared to its sector average and peers, suggesting potential for further upside if it delivers on synergy targets.

The "Catch"

It is important to note that the settlement does come with conditions. HPE has agreed to the following conditions.

Divest its global Instant On campus and branch business: This is a concession to address antitrust concerns. While it's not a core part of HPE's strategy for this acquisition, it removes a revenue stream.

License Juniper's Mist AI source code: This ensures that rivals will have access to this advanced AI technology, which could potentially create competition down the line. However, HPE will have the advantage of tight integration with its hardware.

Here is why the rally could have legs

Strategic Synergy: The merger positions HPE to deliver a full-stack AI-native networking platform, combining Juniper’s Mist AI and HPE’s edge-to-cloud infrastructure. This could significantly boost its competitiveness in AI-driven data centers and cloud-edge markets.

Margin Expansion Potential: Analysts at Bank of America see the deal as a catalyst for multiple expansion and long-term earnings accretion. They even raised their price target on HPE from $20 to $23.

Modest Concessions: HPE agreed to divest its “Instant On” WLAN business and license Juniper’s Mist AI source code to competitors, but these are seen as limited in impact and don’t undermine the strategic rationale.

If the court approves the settlement and the deal closes smoothly, HPE could see sustained momentum—especially if it executes well on cross-selling and AI integration.

We also need to be concerned about how HPE stacks up against Cisco and Arista post-Juniper deal using key valuation metrics.

Valuation Snapshot (as of mid-2025)

Here are some of the key takeaways we should consider”

HPE looks undervalued relative to peers on forward P/E and EV/EBITDA, especially considering the AI-native networking boost from Juniper.

Cisco offers stability with strong margins and a solid dividend, but its PEG and valuation suggest slower growth.

Arista is the growth darling, with premium multiples justified by its 40%+ margins and AI-driven revenue surge—but it’s priced for perfection.

I think this might be the right time to look at the technical indicators and see if we can ride on the July seasonality to time an entry.

Technical Indicators (as of early July 2025)

According to TradingView’s composite technical rating:

1-week and 1-month signals both flash “Buy”, supported by bullish momentum.

Moving Averages lean strongly bullish, with HPE trading above its 50-day and 200-day EMAs — a classic sign of trend strength.

RSI is hovering around 62–65 — not yet overbought, but getting warm. That implies room for upside, though a short-term pullback wouldn’t be surprising.

MACD is in positive territory and widening, suggesting upward momentum is building.

July Seasonality

HPE’s historical July performance is mixed but leans slightly positive:

Over the past 10 years, July has averaged a modest gain of ~2.5%.

Strongest July returns came in 2016 (+13.8%) and 2018 (+6.5%), while 2024 saw a dip of -6.6%.

Seasonality suggests early-to-mid July entries tend to outperform late-month ones.

Strategy Insight

I will be doing the following to plan for a short-term entry for HPE.

1. Watch for a minor pullback toward the 20-day EMA (~$19.80–$20.10 range) as a potential entry point.

2. A bullish MACD crossover or RSI bounce off 50–55 could confirm strength.

3. Consider layering in if it breaks above recent highs with volume — that could signal a breakout continuation.

Summary

Despite these concessions, the overall sentiment is that the deal's strategic benefits outweigh the divestiture and licensing requirements. The ability to finally close the acquisition and integrate Juniper's capabilities is a significant positive for HPE's long-term growth prospects.

I think for now, we may do a short-term trade on HPE using the July seasonality strength and potential rally, and re-evaluate our position for HPE again in August.

Appreciate if you could share your thoughts in the comment section whether you think HPE would be a potential good short-term play by taking advantage of the July seasonality strength and potential July rally.

@TigerStars @Daily_Discussion @Tiger_Earnings @TigerWire appreciate if you could feature this article so that fellow tiger would benefit from my investing and trading thoughts.

Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.