Margin Discipline Fades At DELL
Analyst B Shope of Credit Suisse maintains his "neutral" rating on Dell Inc (NASDAQ: DELL), while reducing his estimates for the company. The target price for DELL has been reduced from $14.00 to $12.50.
Dell reported its January quarter revenues significantly ahead of the estimates and the consensus. However, DELL’s EPS was only a penny ahead of the consensus, reflecting limited operating leverage, the analyst says. The company opted for growth at the cost of margins.
“Dell seems comfortable with its current operating expense ratio, implying less potential leverage than we previously anticipated… We remain concerned that Dell's acquisition strategy will pick up steam as it seeks to further diversify its revenue stream,” the analyst mentions. Credit Suisse has reduced its EPS estimate for FY11 from $1.32 to $1.20.
