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The firm, which maintained its $56 price target on the stock, hosted DELL’s incoming CFO, Yvonne McGill, and Director of Investor Relations, Hall Butler, for investor meetings in New York.
“Following meetings with DELL mgmt, we remain convicted in our OW thesis, and see both multiple expansion and positive estimate revisions driving outperformance over the next 12 months,” wrote the analysts.
They explained that factors boosting their confidence in the stock include C1Q being “the PC market bottom” with shipments remaining on track to grow Q/Q in 2H and enterprise hardware budgets remaining challenged in the near term, but guidance being “conservatively de-risked to account for this weakness and potential 2H ASP pressure.”
“AI servers are an underappreciated longer-term TAM expanding opportunity,” the analysts added. “DELL is likely to raise its capital-return commitment at its October 5th Analyst Day.”
Morgan Stanley notes that long-onlys are taking notice of DELL’s simplified messaging, solid execution, the path toward S&P 500 inclusion, and stronger shareholder returns. As a result, they see “a path to continued outperformance.”
