In a note to clients on Tuesday, analysts at Morgan Stanley upgraded Dell Technologies Inc (NYSE:DELL) from Equal-Weight to Overweight and HP Inc (NYSE:HPQ) from Underweight to Equal-Weight. The analysts also raised their price targets on both stocks, with Dell's target increased from $45 to $55 per share, and HP's target increased from $28 to $31 per share. [1]
The decision to upgrade Dell was based on its attractive valuation, cyclical PC tailwinds, and its potential to accelerate shareholder returns. Despite underperforming the S&P 500 by 14 points in the past year, the analysts are more positive about Dell's prospects now that the PC market is showing signs of bottoming in Q1 23. The analysts also noted that they "want to own DELL for the cyclical PC market rebound." HP's upgrade was driven by the broader market recovery, although the analysts highlighted potential risks such as a back end loaded FCF ramp, slowing capital returns, and a more challenged printing business that could limit outperformance.
In conclusion, Morgan Stanley's recent note to clients suggests that Dell and HP stocks are worth considering for investors seeking exposure to the PC market rebound and broader market recovery. While there are potential risks to be aware of, the analysts at Morgan Stanley are optimistic about these companies' prospects and have raised their price targets accordingly. As always, investors should conduct their own due diligence before making any investment decisions.
Graf 1 Development of Dell over five years. Source: investing.com
[1] Forward-looking statements are based on assumptions and current expectations, which may be inaccurate, or based on the current economic environment which is subject to change. Such statements are not guaranteeing of future performance. They involve risks and other uncertainties which are difficult to predict. Results could differ materially from those expressed or implied in any forward-looking statements.
