Dell Technologies' Price Target Raised by Bernstein Analyst Amid Strong Q4 Earnings

Bernstein's Toni Sacconaghi raised their price target on Dell Technologies (NYSE: DELL) by 33.3% from $90 to $120 on 2024/03/01. The analyst maintained their Buy rating on the stock.

Sacconaghi's price target hike followed an assessment of Dell Technologies' Q4 and FY 2024 earnings, reported on 2024/02/29. The quarter was "solid," the analyst explained, "and its AI business showed strong progress on key metrics." Sacconaghi characterized management's Q1 guidance as "very conservative on earnings," given the visibility of "a path to EPS of $8 for FY 2025."

Dell Technologies reported better-than-expected earnings for Q4 2024. The company recorded an EPS of $2.20, beating the Zacks Consensus Estimate by 27.17% and showing a 22% increase compared to Q4 2023's $1.80. However, revenue for the quarter came in at $22.3 billion, missing Q4 2023's $25.04 billion by 11%.

For the full fiscal year 2024, Dell Technologies posted an EPS of $7.13, down 6% year-over-year. Revenue for the year was $88.4 billion, representing a 14% decline compared to the previous year. The company's gross margin also decreased by 8% year-over-year, amounting to $21.44 billion.

Looking ahead, Dell Technologies' management provided guidance for Q1 2025, expecting an EPS of $1.05 to $1.25 and revenue in the range of $21 billion to $22 billion. The company anticipates a 200 basis points decline in gross margin rate quarter-over-quarter. For the full fiscal year 2025, Dell Technologies projects an EPS of $7.25 to $7.75 and revenue between $91 billion and $95 billion. The company expects a 100 basis points decline in gross margin year-over-year, with operating expenses remaining flat.

CEO Yvonne McGil expressed optimism about FY 2025 and announced a 20% increase in the annual dividend. McGil stated, "We're optimistic about FY 2025 and are increasing our annual dividend by 20% – a testament to our confidence in the business and ability to generate strong cash flow." Vice chairman and COO Jeff Clarke highlighted the company's strong momentum in the AI-optimized server market, stating, "We've just started to touch the AI opportunities ahead of us, and we believe Dell is uniquely positioned with our broad portfolio to help customers build GenAI solutions that meet performance, cost, and security requirements."

Following the release of Dell Technologies' earnings and guidance, several other analysts also updated their ratings and price targets for the stock.

Wells Fargo's Aaron Rakers raised their price target by 64.7%, from $85 to $140, and maintained their Strong Buy rating. Evercore ISI Group's Amit Daryanani increased their price target from $95 to $125, representing a 31.6% raise, while maintaining their Buy rating. Barclays' Tim Long raised their price target by 77.4%, from $53 to $94, and maintained their Strong Sell rating.

The consensus among top-rated analysts currently stands at 90.9% rating DELL as a Strong Buy or Buy, with no analysts considering it a Hold. Only 9.1% of analysts recommend or strongly recommend selling the stock.

Analysts forecast that Dell Technologies' upcoming year will deliver earnings per share (EPS) of $5.44. If these predictions hold true, DELL's next yearly EPS will increase by 47% compared to the previous year.

In terms of stock performance, Dell Technologies has seen a significant increase since its latest quarterly report on 2024/02/29. The stock price has risen by 31.6% since then. Looking at the year-over-year performance, DELL has surged by 208.1%, outpacing the S&P 500's growth of 29.9% during the same period.

Toni Sacconaghi, the Bernstein analyst who raised Dell Technologies' price target, is ranked in the bottom 13% out of 4,485 Wall Street analysts by WallStreetZen. Sacconaghi specializes in the Technology and Consumer Cyclical sectors and has an average return of -4.2% with a 50% win rate.

Dell Technologies Inc. operates globally, providing IT hardware, software, and services solutions. The company is divided into three segments: Infrastructure Solutions Group (ISG), Client Solutions Group (CSG), and VMware. The ISG segment offers storage solutions, servers, and networking products and services. The CSG segment focuses on desktops, notebooks, and workstations, along with software and peripherals. The VMware segment supports various IT priorities for customers, such as cloud migration, digital workspaces, and networking transformation. Dell Technologies also provides information security solutions, cloud-based services, and financial services.

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