Citi Reiterates Buy on Dell

Citi Investment Research is out with a research report on Dell

and it is reiterating its Buy rating and $20 price target on shares. In a note to clients, Citi Investment Research writes, "3FQ revs came in ~2% light, however, EPS of $0.54 were above the street's $0.47 primarily due to the 23.1% gross margin (vs street est of 22.4%). This was not particularly surprising as a top-line miss and margin beat were largely anticipated heading into the print. While mgt indicated confidence in sustaining margins in 4FQ through mix and opex control, cautious commentary on demand and the sub- seasonal outlook on revs led to a slight pull-back in shares after the close. We remain constructive on DELL shares as they trade below 6x our F12 EPS estimates (ex-tax adjusted cash), based on fairly conservative assumptions (1-2% revs growth with no margin expansion during next 2 years). We note that FCF yield is at 16-17%." Shares of DELL gained 31 cents yesterday to close at $15.63.