Shares of Juniper Networks (JNPR) and Hewlett Packard Enterprise (HPE) took a hit after the U.S. Department of Justice (DOJ) filed a lawsuit to block their proposed $14 billion merger. The DOJ argues that the deal would harm competition in the enterprise wireless market and leave only a few dominant players.
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More specifically, the DOJ’s lawsuit claims that the merger would lead to Cisco Systems (CSCO) and HPE controlling over 70% of the U.S. market. This, the DOJ argues, would eliminate the “fierce head-to-head competition” between HPE and Juniper. As a result, the agency believes that blocking the merger is necessary.
Unsurprisingly, HPE and Juniper have pushed back against the lawsuit by stating that they “strongly oppose” the DOJ’s decision and plan to defend the transaction in court. The companies argue that the DOJ’s analysis is “fundamentally flawed” and that they are confident in the merits of the deal. The lawsuit comes after months of regulatory review, and its outcome will undoubtedly have a significant impact on the tech industry.
Is HPE a Good Stock to Buy?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on HPE stock based on seven Buys, four Holds, and zero Sells assigned in the past three months, as indicated by the graphic below. After a 41% rally in its share price over the past year, the average HPE price target of $25 per share implies 19% upside potential.
