Dell Technologies (NYSE:DELL)
The share price of Dell Technologies (NYSE:DELL) fell by more than 12% in Friday’s trading session after the IT company lowered its fiscal 2023 outlook owing to weaker-than-expected enterprise and consumer spending.
Wamsi Mohan, an analyst at Bank of America, cut his revenue and earnings projections for 2023 for the second time this week to $102.7 billion and $6.72 per share, respectively, from $104.6 billion and $6.78. This was done mainly because Mohan believes Dell, with its “large direct-to-consumer” model, will better grasp future trends.
Dell’s demand views contrast recent robust demand outlooks provided by other enterprise-focused businesses,” Mohan, who has a buy rating on Dell Technologies, wrote in a note to investors.
Mohan also stated that the upcoming quarter would see a continuation of the decline in demand but that the technology company may be able to grow and dominate the PC, server, and storage industries by gaining market share.
On Tuesday, Mohan reduced his forecasts for Dell’s fiscal year.
During an earnings call, CFO Tom Sweet said Dell Technologies anticipates reporting earnings, excluding one-time items, in the range of $1.53 to $1.79 per share on revenue in the $23.8 billion to $25 billion range for its fiscal third quarter. Dell Technologies earned $2.37 per share on revenue of $28.4 billion in the third quarter of 2017.
When asked when the company first saw problems with PC sales, Sweet replied it was in May for Dell Technologies (NYSE:DELL). Sweet has remarked that Dell will “stay focused on what we can control” regarding its future direction.
In addition, Sweet stated that the company anticipates sales to be steady with or increase by 2% from the $101.B it recorded in its previous fiscal year.
For example, Deutsche Bank analyst Sidney Ho, who has a buy rating and cut his price objective for Dell Technologies to $55 from $60 due to persistent expenditure difficulties, recently said that the company’s plans to cut spending “limited EPS downside.”
We feel DELL’s forecasts are now more de-risked, and we regard the risk-reward as attractive at the current level,” Ho said, even though the company’s valuation is equal to or slightly below peers (trading at around 6.5 times 2023 earnings).
Even if the PC and enterprise industries show weakness, investment company Bernstein predicted last week that Dell Technologies would post a flat quarter.
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Author Shariq Khan 
