Dell Analysts Didn't Envision 'This Much Upside Potential' After Beat-And-Raise Q2

Shares of Dell Technologies Inc DELL spiked in early trading on Friday, after the company reported its fiscal second-quarter (Q2) results.

The results came amid an exciting earnings season. Here are some key analyst takeaways from the earnings release.

• Raymond James analyst Simon Leopold maintained an Outperform rating, while raising the price target from $50 to $68.
• Morgan Stanley analyst Erik Woodring reiterated an Overweight rating, while lifting the price target from $56 to $70.
• Evercore analyst Amit Daryanani reaffirmed an Outperform rating, while raising the price target from $60 to $70.
• Morgan Stanley analyst Asiya Merchant maintained a Buy rating on the stock.

Check out other analyst stock ratings.

Raymond James: Dell delivered a beat-and-raise quarter. “Upside was balanced across the segments,” Leopold said in a note.

“Although we suspect Dell had de-risked its FY2024 outlook, we had not envisioned this much upside potential,” the analyst wrote. The company’s AI assertions are “gaining credibility,” with 20% of year-to-date server orders being for AI-enabled servers.

Morgan Stanley: “DELL saw demand improve faster than they expected in the quarter,” Woodring wrote in a note.
“With signs of hardware spend stabilizing, AI server emerging as a driver of revenue/profit upside, stepped-up capital return commitments and S&P inclusion still ahead of us, and solid execution/cost mgmt driving profitability upside, we are moving DELL to our Top IT Hardware Pick,” he added.

Evercore: Dell Technologies delivered “impressive” upside to revenues and earnings, with board-based strength “across both infrastructure and client segments,” Daryanani said. “Better mix coupled with disciplined OPEX control enabled a sizable operating margin and EPS upside,” he added.

“DELL appears at the start of AI tailwinds that should extend beyond GPU-enabled servers to potentially storage and DELL’s value proposition should become more attractive as AI deployments extend to large and eventually mid-size enterprises,” the analyst further wrote.
Citi: “Amidst a better than expected demand environment, Dell delivered strong results that demonstrate their leading positions in their core markets and focus more on profitable segments, coupled with operational expense discipline,” Merchant wrote.

“Dell’s October guide bakes in a sub-seasonal flattish sequential outlook despite other hardware peers guiding for sequential growth, reflecting more conservative stance as enterprise spending continues to lag and more price/margin pressure are expected ahead,” the analyst added.

DELL Price Action: Shares of Dell Technologies had risen by 22.78% to $69.05 at the time of publication Friday.

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