Dell (DELL) PT Lowered to $68 at BofA/Merrill Lynch

BofA/Merrill Lynch analyst Wamsi Mohan reiterated a Buy rating but cut his price target on Dell (NYSE: DELL) to $68 after a VAR survey showed deceleration in storage trends. The C2Q19 VAR survey showed:

1) Dell-EMC wallet share in Flash increased to 20%

2) Dell-EMC wallet share in HyperConverged (HCI) storage increased significantly in C2Q19 to 30% versus only 10% in our prior C1Q19 survey

3) 70% of the survey respondents see increased bundling from DELL of storage and VMWare (we see Dell’s broad product portfolio as a competitive advantage that allows the company to offer bundled pricing)

4) 20% of survey respondents say that recent changes to Dell-EMC’s channel program makes them more likely to offer Dell-EMC products to end customers versus NetApp (vs. 15% in our prior C1Q19 survey)

The analyst stated "Despite increased wallet share, we remain cautious post our VAR (value-added retailer) survey that noted overall market deceleration in storage spending and lower our storage revenue estimates for Dell in F2Q20 (June 2019 quarter) and F3Q20 (Oct 2019 quarter)".

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