Goldman Adds Dell To Buy List, Bumping HP

Includes: DELL, HPQ
by: Eric Savitz

Goldman Sachs hardware analyst Laura Conigliaro Monday added Dell (NASDAQ:DELL) to the firm’s “Conviction Buy List,” bumping Hewlett-Packard (NYSE:HPQ) from the list. She also boosted her price target on Dell shares to $35 from $33.

Conigliaro writes that she sees several near-term catalysts for Dell’s stock. For starters, she says the company’s retail partnerships - Wal-Mart (NYSE:WMT) and Staples (NASDAQ:SPLS) so far, with more to follow - should add $500 million to $1 billion in revenue over the next year. She also notes that continuing decline in DRAM pricing should benefit gross margins. Another factor: Conigliaro says the company is close to getting current on its financial filings, which should “unlock” its stock repurchase plan. And she says Dell’s tax rate should come down.

For all of those reasons, she raised her 2008 EPS estimate to $1.77, from $1.74.

Conigliaro maintains her Buy rating on HP, and says the company is “in position” to hear her EPS estimate of 82 cents for the October quarter.

Dell Monday is up 97 cents at $29.90; HP is off 31 cents at $52.16.

DELL vs. HPQ 1-yr chart: