Shares are getting a lift on Friday from Evercore ISI analyst Amit Daryani, who reiterated his outperform rating and raised his price target on the stock from $ 75 to $ 85.
Dell (ticker: DEL) shares started selling under pressure earlier in the week, with news that VMware CEO Pat Zellinger had agreed to return to Intel as CEO, succeeding Bob Swann.
Dell owns about 81%
(VMW), and this accounts for a large share of Dell’s market capitalization. The appointment of Gelsinger triggered a wave of stock upgrades
(INTC), looking at his past 30 years of chipmakers, where at one time he became the company’s first chief technology officer. But the market saw Intel’s gains as a pain to VMware, and worried that it might affect Dell’s plan to close its VMware stake to holders later this year.
Daryani argued on Friday that the sell-off in Dales’ shares led to Jelsinger’s news being “largely over,” and Dale’s shares were added to Evercore’s “strategic outperform” list.
The analyst pointed out that Dell continues to negotiate with VMware on three elements of the anticipated spinout: the business relationship between the two parties, the magnitude of an anticipated special-cash dividend from VMware to Dell, and corporate governance. He said Dell would spin out VMware sometime after September of this year, with a substantial cash payment to Dell to help the company de-lever its balance sheet.
“A more simplified corporate structure with a stronger balance sheet will resonate with investors and enable many further expansions,” he wrote, with his total “conservatively reflecting value” at around $ 85 per share. , But a possible scenario above $ 100. And he notes that in the near-term the company is likely to be boosted by higher corporate IT spending on both servers and storage, providing some fundamental momentum.
Dell shares are up 1.1%, to $ 74.08 on Friday.
Write Eric J. at [email protected] Savitz