Dell's Q3 Revenues and Earnings to Beat Consensus Expectations

Bernstein Research maintains its “outperform” rating for Dell Inc (NASDAQ: DELL), while raising its estimates for the company. The target price for DELL is set to $18.

Bernstein Research expects DELL to post its Q310 EPS and revenues marginally ahead of the consensus. Bernstein Research believes that DELL’s revenues benefited from better-than-expected demand in the PC market and a weakening dollar.

Dell and EMC have been de-emphasizing on the reselling portion of their partnership. According to Bernstein Research, this reselling portion will drive growth in Dell’s storage revenue in the forthcoming quarters. Despite rising component costs, Dell can post sequential gross margin expansion due to improving volumes and high-margin government business due to seasonality. Continued efforts to reduce COGS and DELL’s ability to offset some pressure from commodity price hike through adjustments in product mix and price may also help the company, Bernstein Research believes.

Bernstein Research has raised its EPS estimate for 2009 from $1.07 to $1.08.