Goldman Sachs Upgrades Dell Technologies On Strong Debt Paydowns

Dell Technologies Inc (NYSE: DELL) seems well positioned to continue rapid debt paydowns, even amid potential demand volatility, according to Goldman Sachs.

The Dell Technologies Analyst: Rod Hall upgraded Dell Technologies from Hold to Buy, while raising the price target from $68 to $96.

The Dell Technologies Thesis: Driven by strong free cash flows, the debt paydowns increase the likelihood of a stock re-rating, while strengthening the company’s positioning for a “potential upgrade to investment grade,” Hall said in the note.

“In terms of near-term fundamentals, we factor PC and enterprise demand risk into our model and our revenue forecasts are slightly below consensus as a result. However, this is more than offset by above consensus gross margin forecasts driven by a detailed mix model,” the analyst noted.

“Separately, while we acknowledge that Dell’s ongoing strategic discussions could lead to a range of outcomes, we note that a potential VMW spin-off and associated special cash dividend could unlock material further value for Dell shareholders,” he added.

DELL Price Action: Shares of Dell Technologies has risen by 4.57% to $77.33 at the time of publication Tuesday.

(Photo: Angele Davidson via Dell)