Goldman, Deutsche Bank Remain Bullish On Dell

| About: Dell Inc. (DELL)

Shares of Dell Inc. (NASDAQ:DELL) continued to climb on Friday after the computer giant showed dramatic improvements in almost every operational category when it reported first quarter earnings on Thursday. The company, in the middle of a turnaround effort, also said it will cut 10% of its workforce.

Despite the challenges Dell faces going forward, gains in revenue, gross and operating margins, and earnings, sends a strong statement to the market that its model is leverageable, according to Laura Conigliaro at Goldman Sachs.
“Specifically, Dell’s return to revenue growth came a quarter earlier than we expected...” the analyst said in a research note.

In addition to the job cuts, which she said would add around US6¢ in earnings per share once they are complete, other important changes include Dell’s retail push, a major move into lower cost regions and a renewed focus on consumer offerings and services.

Ms. Conigliaro has a “buy” rating and US$32 price target on Dell shares, which represents upside of roughly 15%. They have risen steadily since March.

Deutsche Bank is also optimistic on the company’s prospects with a “buy” recommendation, raising its price target on the stock to US$34 from US$28.

“We believe Dell will benefit from the combination of management’s repositioning efforts and a corporate PC upgrade cycle,” Deutsche Bank said in a research note, adding that the company’s efforts should translate into earnings gains.

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