Dell Gets Second Downgrade in Two Days as Goldman Sachs Moves to Neutral, Removes Shares From Conviction Buy List
2022.04.01 17:22
Dell (DELL) Gets Second Downgrade in Two Days as Goldman Sachs Moves to Neutral, Removes Shares From Conviction Buy List
Shares of Dell Technologies (NYSE:DELL) are down nearly 4% today after Goldman Sachs analyst Rod Hall downgraded to Neutral from Buy amid fundamental risks.
Moreover, Hall removed DELL shares from the GS Conviction Buy List after outperformance in the stock.
Our Buy rating on DELL was primarily based on the value unlock opportunity for the company from the VMW spin-off which has since been completed. We continue to believe DELL remains inexpensive compared to its peers, but we see increasing fundamental headwinds hindering this value unlock, Hall said in a client note.
The analyst sees fundamental risks for Dell with the PC demand already moderating for low-end consumers while the high-end is also expected to inflect this year.
These demand trends could be exacerbated on the negative side by increasing pressure on the consumer economy, driven by inflation. We also expect PC ASPs to soften as supply/demand equilibrium improves and discounting comes back. On the ISG front, we see Dell’s situation as more mixed with our proprietary EAI/ESI indices pointing towards a slowdown in IT spending even as the company’s mid-range storage is starting to ramp well.
A new price target on Dell shares is $61.00, down from $78.00 previously.
This is the second downgrade in just two days for Dell after Morgan Stanley also moved lower on the rating scale yesterday.
By Senad Karaahmetovic
