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| Dell
- Bottomed Out? No! Independent Buy-Side Research By The-Adviser.com - |
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SERVICES WHY US |
(Analyst
is MD. Porcelain) - November 13, 2000 - New York
- Dell Computer Corp.'s stock fell sharply as
the Company reported third quarter results in-line with previously-lowered
expectations. Additionally, the Company revised it forecast for 2002 sales
growth downward to 20%. The revision is attributable to aggressive pricing
pressures.
The stock broke through the $27 price level and hit $22 before finishing the week at $23. Although we continue to have a high level of confidence in Dell's long-term business strategy and believe that Dell will eventually benefit from an increased pick-up in European demand we are reducing our two year price objective of $75 to $45. The stock has additional room on the downside due to tax loss selling and we would be buyers of the stock between $18 and $25. Dell remains the premier PC supplier to businesses and consumers and we have faith that the short-term volatility and revenue pressures will abide. Dell continues to believe that strong revenue growth in 2001 will come from a focus on international expansion; an ongoing customer transition to mobile computing products and demand for products and services associated with the global build-out of the Internet infrastructure. We still feel good about those plans. We believe that Dell will generate significant positive cash flows for the next six quarters. In order to absorb additional dilutive option exercises from long-time employees, we expect that Dell will announce a formal program to increase the amount of treasury stock repurchases. We
continue our short-term and long-term BUY rating on the stock and maintain
our 2 year price objective of $45. Our EPS estimates are indicated below:
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Dell remains a strong growth story. A core technology play for long-term investors. Open a professionally managed account:
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