By Senad Karaahmetovic
Shares of Dell Technologies (NYSE:DELL) are down over 4% as the PC maker’s results and guide-down imply a deteriorating macro environment.
Dell reported Q2 EPS of $1.68 to beat the analyst estimate of $1.64. Revenue for the quarter came in at $26.4 billion versus the consensus estimate of $26.61 billion.
“We remain focused on what we can control, staying flexible and opportunistic, and delivering revenue and EPS growth with strong free cash flow to our shareholders over time,” said CFO Tom Sweet.
The company highlighted a slowdown in demand experienced recently, which forced it to slash its FY23 revenue forecast to 0-2% YoY from the prior outlook of 6% YoY. Dell’s long-term target range is for its revenue to grow between 3% and 4%.
A Morgan Stanley analyst cut the price target to $54 from $56 and argues “it'll be challenging for DELL to outperform peers in the near-term.”
Still, the analyst sees DELL as “better-positioned than other enterprise peers.”
A Goldman Sachs analyst also cut the price target as he went to $43 per share on Neutral-rated DELL shares. The analyst also noted that “weakness commentary has surprised the Street especially on the heels of positive reports from CSCO and NTAP.”
“Supply is improving but this is offset by demand and margin risks in both PCs and enterprise IT in our opinion… We believe the company's strong execution track record, healthy cash flow generation and cheaper valuation balance fundamental risk,” the analyst added in a client note.