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While Goldman noted the risks of a still-depressed PC market, its analysts said they believe sentiment and expectations could tilt positive in 2013. Goldman set a new 12-month price target on Dell of $13 from an earlier $9.
Goldman said it still believes Dell faces “secular challenges” due to its exposure to PCs and estimates that PC demand weakness will “remain severe in the near term.”
Shares of Dell are down about 38% from a year ago but soared as high as 7% to $10.49 on the news.
With consensus expectations for Dell’s fiscal-year 2014 down about 28% from its peak, Goldman said a positive risk/reward has emerged for the stock. The bank did not alter its quarterly or fiscal-year estimates on Dell.
“Over the past two years we have urged investors to avoid ‘deep value’ technology stocks, particularly those with outsized exposure to the PC, server and printing end markets,” Goldman analysts said in the report. “Nevertheless, we believe many of our secular concerns over these market segments and Dell in particular have now become consensus. With this in mind, we now believe that Dell has become an attractive deep value play and we would be buyers of the stock.”