Dell's Higher Notebook Mix, Focus On ASP, Storage Business Steadiness, Higher Contribution From Software & Services Likely To Bode Well: Analyst

Credit Suisse analyst Shannon Cross had an Outperform rating on Dell Technologies Inc DELL with a $50.00 price target.
Last week at CES, Cross met with Zak Broderick and Paul Frantz of the Dell IR team for an update on the business.
The analyst made no changes to estimates or target price.
Macroeconomic uncertainty magnified difficulty in forecasting demand levels in F2024, with management assessing a wide range of outcomes. This led to the company guiding estimates down 10% to down 12% for F2024 during its November 21 earnings call.
While PC demand has weakened, the company believes the installed base was fundamentally reset during the pandemic with a higher mix of notebooks (which have shorter lives) and higher value devices (needed for productivity).
The analyst expects a continued focus on growing ASPs (rather than units) and keeping margins above pre-2020 levels of 4-5%.
The storage business is executing well and benefitting from a streamlined and refreshed portfolio.
Higher software and services content is resulting in more deferred revenue, which is now beginning to be recognized as revenue. Dell believes it is gaining share.
Cash flow will likely be under pressure from PC weakness, but there is some opportunity to reduce inventory.
Dell maintains its commitment to return cash to shareholders (dividend and share repurchase) while continuing to assess M&A opportunities (assuming tuck-ins targeting growth areas including telco and edge computing).
Also Read: Dell Eyes Reducing Dependence On China - India, Latin America Likely To Be Beneficiaries, Analysts Say
Price Action: DELL shares traded higher by 0.88% at $42.795 on the last check Monday.
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