Rakers' decision to increase the price target was based on Dell Technologies' Q2 2024 earnings report, which was released on August 31st, 2023. According to the analyst, the post-earnings increase in the stock price was justified by several factors.
Firstly, Dell reported earnings per share (EPS) of $1.74 for Q2 2024, surpassing the Zacks Consensus Estimate of $1.13 and showing a 4% increase compared to the same quarter last year. Additionally, the company's revenue of $22.93 billion beat the Zacks Consensus Estimate by 10.36%.
Moreover, Dell's management raised their guidance for FY 2024, which was seen as a positive sign by Rakers. The company now expects EPS of $6.10 to $6.30 and revenue of $89.5 billion to $91.5 billion for the fiscal year.
Rakers also highlighted Dell's significant capital return potential and positive comments on AI orders as reasons for the increased price target. The analyst noted that management's statements on indicators of stability and rising demand in small business and government sectors were encouraging, particularly considering the pessimistic predictions on the demand dynamics for corporate servers and storage.
In addition to Rakers' rating, several other analysts updated their ratings for Dell on September 1st, 2023. Barclays' Tim Long raised their price target by 17.8% to $45 and maintained a Hold rating on the stock. Goldman Sachs' Michael Ng raised their price target by 11.5% to $61 and maintained a Strong Buy rating. Morgan Stanley's Erik Woodring raised their price target by 25% to $56 and maintained a Strong Buy rating.
Overall, 75% of the top-rated analysts currently rate Dell as a Strong Buy or Buy, while 12.5% see it as a Hold. The remaining 12.5% either recommend or strongly recommend selling the stock.
The consensus forecast among analysts is that Dell's upcoming year will deliver EPS of $3.82, representing a 44% increase on a year-over-year basis if the analysts are correct.
Since Dell's latest quarterly report on August 31st, 2023, the stock price has risen by 23.2%. On a year-over-year basis, the stock is up by an impressive 84%. During this period, Dell has outperformed the S&P 500, which has seen a 14.1% increase.
It is worth noting that Wells Fargo analyst Aaron Rakers is ranked in the top 1% out of 4,329 Wall Street analysts, with an average return of 28.2% and a 69.1% win rate. Rakers specializes in the Consumer Cyclical and Technology sectors.
Dell Technologies Inc. is a global company that designs, develops, manufactures, markets, sells, and supports IT hardware, software, and services solutions. The company operates through three segments: Infrastructure Solutions Group (ISG), Client Solutions Group (CSG), and VMware.
The ISG segment provides traditional and next-generation storage solutions, as well as servers and networking products and services. The CSG segment offers desktops, notebooks, workstations, displays, and projectors. The VMware segment supports various IT priorities of customers, including cloud migration, application modernization, digital workspaces, networking transformation, and security.
Dell Technologies has a strong focus on innovation and customer value, with a commitment to enhancing productivity and efficiency. The company aims to grow and extend its core business in areas with attractive profit pools while remaining disciplined on pricing and cost management.
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