NEW YORK (TheStreet) -- Shares of Hewlett Packard Enterprise (HPE) - Get Report are advancing 0.52% to $17.29 in mid-afternoon trading on Tuesday as Wells Fargo said that flattening the company's management structure should increase accountability, Barron's reports.
Yesterday, HP Enterprise announced several management and organizational changes at the company, such as the retirement of chief technology officer Martin Fink.
"Flattening the management structure, in our opinion, should increase accountability (something that has improved materially under CEO Meg Whitman) and increase the company's ability to move more quickly," the firm wrote in a note cited by Barron's.
Wells Fargo is also encouraged by the company's move to combine its research and development outfit HP Labs with its enterprise unit.
"While we view the retirement of Martin Fink as a loss, the union, in our opinion, of these two divisions makes sense today as time to market in this fast moving industry is critical and we believe HPE has had some issues in fully commercializing its products and bringing some of its innovation to market in a timely fashion," the firm said.
The firm also noted that there could be some long-term risk in reducing innovation when aligning so closely to the business model. But it believes the current labs plan mitigates any risk near and medium-term.
Wells Fargo has an "outperform" rating and $20 to $22 "valuation range" on the stock.