Dell Technologies' stock (NYSE:DELL) has been given a boost this morning, up 0.65% in the pre-market following a revised price target from Morgan Stanley. The firm increased its target to $148 from $135, reiterating an Overweight rating on the stock.
With DELL having recently dipped below the $130 level, bulls are eyeing up a break to the upside this morning.
The analyst's note suggests that the recent dip in Dell's share price presents an opportune entry point for investors ahead of upcoming earnings this time next week (28th). EPS is expected to come in at $2.29 on the period, showing a healthy improvement on the $1.89 in the same period Y/Y. Revenue is expected to have grown 16.65% to $29.19billion.
Expectations are that Dell's July quarter results will demonstrate resilience in enterprise hardware, fueled by strong AI spending and a solid performance in the PC sector during the second quarter. Morgan Stanley anticipates potential upside to both Dell's Q2 estimates and its full-year outlook.
Bull Case:
- Morgan Stanley's reiterated “Overweight” rating and increased price target to $148 signals strong analyst confidence.
- Strong AI server momentum and spending are expected to fuel significant revenue growth.
- The company shows resilience in enterprise hardware and solid performance in the PC sector.
- A substantial increase in orders for AI server systems, like the GB200 rack, indicates robust market demand.
- Analysts view the recent dip in share price as an opportune entry point ahead of anticipated positive earnings.
Bear Case:
- The company has previously issued conservative forward guidance, which has led to price target reductions.
- A history of project delays, including AI server build plans, poses a risk to future timelines and revenue forecasts.
- Stock price remains volatile and is trading below its 52-week high, reflecting ongoing market uncertainty.
- Long-term success is contingent on navigating the challenging broader tech environment and flawlessly executing its AI-focused strategy.
Morgan Stanley's note underscores the potential upside for Dell's Q2 estimates and full-year outlook, contingent upon sustained demand and successful execution of its AI-focused strategy. The market will be closely watching Dell's upcoming earnings report to assess whether the company can meet these elevated expectations and maintain its position as a key player in the evolving tech landscape.
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