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Investing.com - KeyBanc initiated coverage on Dell (NYSE:DELL) with a Sector Weight rating on Wednesday. According to InvestingPro data, Dell has maintained strong momentum with a market capitalization of $81.7 billion and trades near its Fair Value.
The research firm cited Dell’s strong management team that is executing well as one of the positive factors supporting its rating decision. KeyBanc also highlighted the company’s leadership position in its end markets as a favorable aspect of Dell’s business. InvestingPro data shows management’s commitment through aggressive share buybacks, while maintaining a 1.74% dividend yield that has grown for three consecutive years.
KeyBanc noted Dell’s strong financial profile in terms of revenue growth, profitability growth, and capital return as additional strengths. The firm’s analysis indicates the stock is currently trading at 8.6 times its 2027 adjusted EBITDA estimate, compared to a three-year average of approximately 7 times. Recent financial data shows revenue of $96.7 billion with a 7.75% growth rate, while maintaining a PEG ratio of 0.78, suggesting reasonable valuation relative to growth.
Despite these positives, KeyBanc expressed concerns about Dell’s gross margin, which it expects to remain under pressure due to growth in AI Server business. The firm pointed out that Dell is reliant on driving operating expense declines to boost profitability growth, and believes cost reduction efforts are "likely to have diminishing returns over time."
KeyBanc also expressed skepticism about meaningful growth prospects for Dell’s Client Solutions Group (CSG), contributing to its conclusion that the stock is "fairly valued" at current levels.
In other recent news, Dell Technologies Inc. has been the subject of several notable updates. Dell’s fiscal outlook for 2026 remains robust, with the company reiterating its revenue forecast of $101-105 billion and raising its earnings per share (EPS) target to approximately $9.40, according to TD Cowen. This optimism is fueled by strong AI server orders and steady Commercial PC sales. However, Dell’s first-quarter performance fell short of expectations in AI server revenue and gross margin, leading UBS to adjust its price target to $145 while maintaining a Buy rating. Goldman Sachs also maintained a Buy rating, citing strong AI server orders as a counterbalance to missed EPS and EBIT expectations, with a price target of $130. Aletheia Capital reiterated a Buy rating with a $150 target, reflecting confidence in Dell’s market potential. Despite challenges in the Infrastructure Solutions Group, Dell reported a record $12.1 billion in AI server orders, with $7 billion expected to convert to revenue in the second quarter of fiscal 2026. The company has also executed significant share buybacks, purchasing 22.1 million shares, which contributed to an increase in its EPS guidance for fiscal 2026. These developments highlight Dell’s strategic focus on AI and disciplined financial management amidst a dynamic market environment.
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