Broadpoint.Amtech analyst Dinesh Moorjani Monday morning raised his rating on Dell (DELL) to Buy from Neutral, setting a price target of $18. The stock clsoed Friday at $14.49.
Moorjani, who notes that in March he had raised his rating to Neutral from Sell, writes in a research note that until now he had been cautious on the stock on concerns over the IT demand environment and a downward mix shift in PCs. But Moorjani writes that he is “now more optimistic on the PC demand outlook and believe the downward mix shift has played out for the most part.”
Moorjani asserts in his note that :”corporations cannot defer IT purchases forever,” and that a PC/server upgrade cycle is coming in 2010, driven by an aging installed base, with hardware and OS transitions serving as catalysts. He notes that Dell has high exposure (in a good way) to a corporate refresh, with 52% SMB/enterprise exposure, and 67% of revenue from PCs and servers.
Moorjani raised his EPS estimate for the January 2010 fiscal year to $1.04, from $1.03. For FY 2011, he goes to $1.31, from $1.26.
Dell Monday morning is up 30 cents, or 2%, to $14.79.