Morgan Stanley's Huberty Raises Estimates and Price Targets on Enterprise Names Dell (DELL), IBM (IBM), Others Amid a More Robust IT Spending Recovery
- Wall Street ends volatile week sharply higher
- AT&T (T) in Talks to Merge Media Assets with Discovery (DISCA) - WSJ
- Disney (DIS) Dips As Streaming Business Shows Signs of Slowing Down, Analysts 'Very Bullish' on LT Opportunity
- Airbnb (ABNB) Bookings Up 52% to Help Sales Beat, Seen as a 'Blow Out Quarter' as More Upside is Left
- DoorDash (DASH) Reports Bigger Loss and a Sales Beat, Shares Soars on Strong Guidance and Two Upgrades to 'Buy'
News and research before you hear about it on CNBC and others. Claim your 1-week free trial to StreetInsider Premium here.
Morgan Stanley analyst Katy Huberty raised estimates and price targets on enterprise stocks after the latest CIO survey showed stronger-than-expected IT spending recovery.
Today’s move from MS analysts comes after the bank upgraded the industry view to “Attractive” in October last year amid a surge in demand for enterprise IT. Huberty notes that IT Hardware has been the best performing Tech group and outperformed the market by 46% since the second quarter of the last year.
“We expect this outperformance to continue, as our 1Q21 CIO Survey results indicate an even faster and more robust IT demand recovery than indicated in our 3Q20 and 4Q20 surveys. CIOs revised up 2021 Hardware budget growth expectations by 230 bps to 2.9% Y/Y, the largest positive budget revision of any Tech group and the largest revision for Hardware in the history of our survey. These results increase our conviction in a 2Q demand inflection,” the analyst said in a note to clients.
The CIO survey data comes in addition to forecasts that project Enterprise Hardware revenue growth of 15% this year, which is the highest in over a decade.
“We're raising our estimates across our Enterprise coverage and now forecast 6% Enterprise Hardware growth in 2021, which we still view as conservative. This combined with our expectation for greater operating leverage leads to EPS estimates 6% ahead of the Street. We increase our price targets across 9 Enterprise Hardware names to reflect our improved confidence in a material demand recovery,” Huberty adds.
The analyst continues to prefer stocks with a “clear path to operating leverage as revenue growth re-accelerates.”
“We raised price targets across 9 companies (CDW, DELL, HPE, HPQ, IBM, NCR, NTAP, STX, and TDC) by 7%, on average. However, we decreased price targets at NTNX and PSTG to reflect lower peer multiples as interest rates rise. Across our entire IT Hardware coverage (19 companies), there is now 11% average upside to our base case price targets and an average 1.5x bull-to-bear skew which reflects a favorable risk-reward.”
Among stocks that saw their price targets hiked at Morgan Stanley, CDW Corporation (NYSE: CDW) got the biggest upgrade to $188.00 from $164.00. A new price target for IBM (NYSE: IBM) is $150.00 (up from $140.00), while the PT for Dell Technologies (NASDAQ: DELL) now sits at $107.00 per share (prior $97.00).
Serious News for Serious Traders! Try StreetInsider.com Premium Free!
You May Also Be Interested In
- ACV Auctions Inc (ACVA) PT Lowered to $41 as Jefferies Sees One Issue with the Quarter
- Cipla Ltd. (CIPLA:IN) PT Lowered to INR890 at Goldman Sachs
- Balkrishna Industries Ltd. (BIL:IN) PT Raised to INR1,500 at Kotak
Create E-mail Alert Related CategoriesAnalyst Comments, Analyst EPS Change, Hot Comments
Related EntitiesMorgan Stanley, Katy Huberty
Sign up for StreetInsider Free!
Receive full access to all new and archived articles, unlimited portfolio tracking, e-mail alerts, custom newswires and RSS feeds - and more!