Dell Technologies Reports Earnings Soon. One Analyst Sees the Stock Rising.
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Dell featured in a computer store.
Anindito Mukherjee/Bloomberg
Even with PC demand softening and component shortages continuing, Dell Technologies could be poised to post better-than-expected results for the April quarter when it reports the first quarter after the close of trading on Thursday.
That’s the view of Evercore ISI analyst Amit Daryanani, who on Wednesday added Dell (ticker: DELL) shares to his firm’s “tactical outperform” list ahead of the report. He maintains his Outperform rating and $60 target on the stock, which closed Tuesday at $40.88.
Dell’s guidance for the quarter projects revenue in the range from $24.5 billion to $25.7 billion, with non-GAAP profits per share ranging from $1.25 to $1.50. Street consensus calls for $25 billion in revenue, up 2%, and non-GAAP profits of $1.39 a share.
According to FactSet, the Street sees revenue for the company’s Client Solutions Group, which includes both commercial and consumer PCs, of $15.5 billion, up 16.7% from a year ago. For the company’s Infrastructure Solutions Group, which includes storage, servers, and networking products, consensus calls for revenue of $8.3 billion, up 5%.
For the July quarter, the Street sees $25.6 billion in revenue and non-GAAP earnings per share of $1.47. Dell last quarter did not provide detailed full-year guidance, but suggested investors use the company’s long-term target of 3% to 4% revenue growth and 6% EPS growth as a model. Street consensus calls for $104.4 billion, up 3.1%, with EPS of $6.62.
Daryanani writes in a research note that “while supply chain remains a wild card,” demand trends remain robust enough for Dell to both beat April quarter guidance, and raise their outlook for the full year. “We think the IT spend environment is stronger than the guided top-line growth suggests, and while supply chain is a wild card we think Dell is one of best supply-chain companies globally to navigate these issues,” he writes.
The analyst adds that he sees potential upside in the quarter from better-than-expected PC sales despite supply chain and foreign exchange headwinds. He notes that IDC data on March quarter PC sales showed global shipments declined 5.1% overall, but that Dell’s units were up 6.1%. He also notes that Lenovo’s earnings report in late February included “solid beats” on both revenue and profits, powered by 25% growth in commercial PCs. Note that most of Dell’s PCs are sold to businesses, not consumers.
Dell stock on Wednesday is 2.6% higher to $41.94. Shares are down 25% year to date.
Write to Eric J. Savitz at eric.savitz@barrons.com
