Sterne Agee‘s Shaw Wu today raised his rating on shares of Dell (DELL) to Neutral from Underperform, writing that the 17% drop in the stock since mid-February, versus a 2% decline in the Standard & Poor’s 500 Index, have brought the stock in line with his price target of $15.
Wu suspended that price target today. The stock is currently down 4 cents at $14.98.
Although overly bullish investor expectations have been “reset,” he writes, he’s still concerned the business can disappoint:
We remain concerned that DELL is in a tough fundamental position sandwiched between low-cost players (Lenovo and Acer) and AAPL encroaching more in its core PC business as Macs and mobile devices gain share. Despite efforts to grow beyond a PC company with multiple acquisitions over the past few years, we estimate 70%-75% of its business is still
tied to PCs. This includes peripherals, software, and services. We still believe DELL needs to take bolder, more aggressive steps to reinvent itself.
Dell’s fiscal Q1 ended last month, which will be reported next Tuesday, May 22nd, will probably beat the consensus for $14.9 billion and 46 cents a share, he thinks, given “Our supply chain checks indicate stabilizing PC market conditions.”
“However, for its outlook, we believe DELL may need to lower expectations vs.
consensus at $15.5 billion in revenue and $0.51 in EPS.”
No comments:
Post a Comment