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Analysis of Dell Technologies Inc.

Analysis of Dell Technologies Inc.

8 June 2022

Dell: focus on the premium segment

Competition in the field of technology is only getting tougher from year to year, and finding a foothold is more difficult. But Dell managed to find its niche, solidify and earn.

At the end of May, the corporation submitted quarterly reports in which:

  • the company reported the largest ever revenue of $26.12 billion. Earnings per share were $1.84 versus $1.4 forecast;
  • operating and net profit updated records;
  • the company has expanded its share in the niche of premium laptops and laptops for commercial use – 80% of sales fell on this segment;
  • Dell’s forecast for the second quarter expects revenue growth to $26.1-27.1 billion, which implies a profit of $1.55-1.70 per security.

These are very good indicators. The second largest manufacturer of computers and laptops in the United States – Dell is second only to Apple – has made sales of powerful office PCs and hybrid models for remote work a driver of growth. Given that the coronavirus has not been defeated in the world, and there may be further problems with parts for high-precision technologies, Dell can earn more.

However, within the economic cycle, there are risks of slowing demand – both due to market saturation and active work of competitors. This forces the adjustment of the growth potential of the shares during the year.

The industry consensus forecast suggests that Dell shares could rise to $75-80 by 2023. Today’s price is $51.02, which creates a potential increase of 47%. Adjusted for economic realities, it is unlikely that the probability of growth is higher than 25-30%. This means a target of $63.75.

On the daily chart, the MACD indicator has entered a positive zone and is growing simultaneously with trading volumes, which confirms the buy signal. The Stohastic indicator retains the buy signal, although it has entered the overbought zone. 

8 June 2022
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