Goldman Sachs Upgrades Dell Technologies On Strong Debt Paydowns

Dell Technologies Inc DELL seems well positioned to continue rapid debt paydowns, even amid potential demand volatility, according to Goldman Sachs.

The Dell Technologies Analyst: Rod Hall upgraded Dell Technologies from Hold to Buy, while raising the price target from $68 to $96.

The Dell Technologies Thesis: Driven by strong free cash flows, the debt paydowns increase the likelihood of a stock re-rating, while strengthening the company’s positioning for a “potential upgrade to investment grade,” Hall said in the note.

“In terms of near-term fundamentals, we factor PC and enterprise demand risk into our model and our revenue forecasts are slightly below consensus as a result. However, this is more than offset by above consensus gross margin forecasts driven by a detailed mix model,” the analyst noted.

“Separately, while we acknowledge that Dell’s ongoing strategic discussions could lead to a range of outcomes, we note that a potential VMW spin-off and associated special cash dividend could unlock material further value for Dell shareholders,” he added.

DELL Price Action: Shares of Dell Technologies has risen by 4.57% to $77.33 at the time of publication Tuesday.

(Photo: Angele Davidson via Dell)