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Time to buy Dell (DELL)? Goldman Sachs hardware analyst Laura Conigliaro thinks so. Yesterday morning, she raised her rating on the troubled PC maker to Buy from Neutral, asserting that there are “numerous catalysts” for the stock over the next 12-18 months.

She wrote in a research note:

Although we know we are early and that there will be inevitable backsteps, the history of turnarounds suggests that a good part of the stock rise comes in the first 12 months. We see the October 2007 quarter as the point of inflection, in essence starting the clock on the actual turnaround, pointing investors toward fiscal 2009 as the first key year. Our 12-month $28 target price applies similar metrics to Dell as seen with Hewlett-Packard (HPQ) and Sun (SUNW), hardware’s two most recent turnarounds.

Here’s a summary of Conigliaro’s list of potential catalysts for the stocks:

  • Dell should catch up its SEC filings by mid-April, returning to more normal information flow, and paving the way for accelerated buybacks. She says a resumption of repurchase activity could add 4 cents a share to her current 2008 EPS estimates; if it tries to catch up for the lack of buyback activity over the last three quarters, she says, it could add 13 cents to 2008 EPS.
  • Dell, she writes, “has many growth opportunities.” She lists new consumer offerings, an increase in services and a more robust corporate upgrade cycle.
  • She thinks operating margins could widen from her current forecast of 6.4% in calendar 2008. Conigliaro says margins have been hampered by lower volumes, an unfavorable product mix and mis-execution, among other things.
  • Dell could expand into new areas, in particular through acquisitions; Dell could experiment more with a shift in distribution strategy towards the channel and not just through its familiar direct model. Another possibility: offering hardware powered by Linux of Sun’s Solaris. And the company could move into PDA or other new hardware products.
  • Dell yesterday was up 55 cents at $23.38.

    DELL 1-yr chart
    dell chart

    Source: Dell: "Numerous Catalysts" Ahead