Dell stock slips as outlook trails estimates; Analysts see attractive valuation

Investing.com -- Dell Technologies reported Thursday better-than-expected first-quarter results, though performance was held back by a challenging economic backdrop as PC demand weakness persists.

Dell Technologies (NYSE: DELL) shares were down 3% in early Friday trading.

The company reported first-quarter adjusted EPS of $1.31 on revenue of $20.9 billion, compared with estimates for $0.86 per share and $20.3 billion, respectively.

The beat on the bottom line comes even as margins and revenue fell amid a weaker backdrop for PC demand.

Dell's client solutions group and infrastructure solutions group business saw revenue fall 23% and 18% respectively amid "challenging economic backdrop," the company said.

Dell guided for Q2 revenue of $20.7B at the midpoint of the range, worse than the Street at $21.1B.

Goldman Sachs analyst Michael Ng highlighted a weak recovery in Dell's core PC business.

"Although DELL increased its F2024 EPS guidance by $0.20 at the mid-point, this only represents a partial flow-through of the ~$0.51 beat relative to the mid-point of DELL’s F1Q24 guidance," Ng said.

Deutsche Bank analyst Sidney Ho raised the price target by $3 to $48 per share on the Buy-rated DELL stock.

"Considering a tough macro environment suggested by other IT hardware peers, we are not too surprised by DELL's cautious comments in the near term, and we view a delayed recovery as reasonable," Ho wrote in a client note.

"We continue to believe DELL's guidance is more de-risked, and with the stock trading at ~7x CY24E EPS, we believe the risk-reward is attractive."

Additional reporting by Senad Karaahmetovic

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