Credit Suisse First Boston: Dell Undervalued

From Forbes:

Credit Suisse First Boston maintained an “outperform” rating on Dell and advised investors to buy shares of the PC giant at current levels.
At a technology conference hosted by CSFB, Dell’s Chief Executive Jim Schneider said he expects continued demand for PCs, particularly for lower-priced computers, an area Dell has shied away from due to the slimmer profit margins.
“Although we believe the strength at the low-end of the PC market is not ideal for Dell, we believe its operating model is still advantaged and the company will still likely grow its top line 10% to 12% on a long-term basis,” said analyst Robert Semple.
“The derivative takeaway is suppliers into the PC industry should continue to benefit for the foreseeable future.”
Semple said hard-drive makers such as Western Digital and Maxtor should benefit the most from this trend.
The research analyst reiterated a $35 price target on Dell. “With its shares trading at 17 times calendar 2006 earnings per share, an 8% premium to the market, we believe Dell is undervalued relative to the growth and profit characteristics it is poised to deliver,” he said. “As a result, we would be buyers of Dell’s stock at current levels.”
CSFB rates Western Digital at “outperform” with a $17 price target while Maxtor has a “neutral” rating with a price target of $5.50.

Posted by on November 30th, 2005 at 2:22 pm

The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.