Dell (DELL) PT Lowered to $128 at Morgan Stanley, 'A Tricky Setup into the FY26 Guide'

Morgan Stanley analyst Erik Woodring lowered the price target on Dell (NYSE: DELL) to $128.00 (from $154.00) while maintaining a Overweight rating.

The analyst comments "Expecting a conservative FY26 EPS guide amidst AI product transition, though demand trackers remain robust. The setup into DELL's F4Q print is tricky. On the more cautious side, we are expecting: (1) a FY26 EPS guide-down – which has happened in 4 of the last 6 years; (2) Y/Y ISG margin pressure in FY26; (3) limited near-term AI estimate upside given the well-known compute product transition; and (4) management to speak to a 2H-loaded year. On the positive side: (1) a conservative FY26 EPS guide is already expected given DELL's 21 pts of underperformance since F3Q earnings, its multiple de-coupling from AI infrastructure peers ( Exhibit 1 ), and short interest at a 12+ month high; (2) our AI server demand checks remain robust; and (3) traditional enterprise hardware spending is clearly up-ticking. How should one position themselves ahead of this setup? We'd highlight that over the last 8 quarters, DELL has been up 4 quarters and down 4 quarters in the day post-earnings, with the average absolute value of the post-earnings move at 12%, making it challenging to call the quarter with conviction, and ultimately leaving us leaning cautiously into earnings. However, with an EPS guide down, we believe the FY26 setup could be cleaner post-earnings and that DELL could potentially signal Q/Q revenue and EPS growth through the remainder of the year. That's a post-earnings setup we like, especially at current valuation levels (11.9x our new FY26 EPS and 10.3x our new bull case FY26 EPS), keeping us OW into the print, albeit with a now de-risked FY26 outlook."

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