Deutsche Bank Initiates Coverage on IT Hardware

On Thursday, Deutsche Bank initiated coverage of the IT Hardware sector.

Analyst Sherri Scribner noted IT budgets have been under pressure and said, “software remains a key area of growth, while hardware and services revenue are growing slower.

The analyst feels Apple AAPL, EMC EMC and Hewlett-Packard HPQ are “best positioned to benefit from the next-generation of IT which includes cloud, Big Data, converged infrastructure and mobility.” The stocks were initiated with Buy ratings.

Scribner expects server revenue to grow by “a modest 1-2%” over the next few years, which would be a continuation of decreasing server growth the past two years.

The storage market is next to be experience slow growth as “software defined storage adoption begins to take off.”

Cloud, which accounted for all of the growth in enterprise IT hardware sales in 2013, “remains small.” Scribner views cloud “as a positive for hardware vendors due to its growth, but a negative for margins.”

The analyst also initiated coverage on International Business Machines IBM and NetApp NTAP with Neutral ratings.