PreMarket Prep Stock Of The Day: Dell Technologies

PreMarket Prep Stock Of The Day: Dell Technologies

The price action in Dell Technologies Inc DELL following its first-quarter report makes Dell the PreMarket Prep Stock of the Day.

Sound Familiar? After ending 2019 at $51.37, Dell did not follow the S&P 500 index higher to start 2020. 
In fact, it declined over that two-month span, ending February at $40.46.

Dell fully participated in the March 2020 meltdown, not finding a bottom until March 18 at the bargain price of $25.51. It ended the year nearly 200% higher at $72.89.

The Rally's Not Over: After a slow start to the year ($73.29 to $72.89) Dell’s resumed its relentless move higher in 2021. 
The issue had solid gains in February ($72.89 to $81.07), March ($81.07 to $88.15) and went on to make its all-time high on April 19 at $103.80. Dell posted its all-time closing high that day as well at $103.42.

Dell ended Friday's session down 1.06% at $98.64, narrowly avoiding its second month in the red over the last seven. 

Street Undecided Ahead Of Q1 Report: On many occasions, an issue will make a noticeable move a week or so prior to an earnings report.

For strong stocks similar to Dell, there may be a rally into the report as investors are anticipate another good report or do not want to be short going into the announcement.

For weak stocks, the opposite may be true, as investors do not want to sit through another disappointing earnings report.

In Dell, investors did not do much, similar to the market.

Until Friday’s price action, the issue traded in a narrow range from $98.99 to $100.94.

To emphasize this point even more: the last three closes in the issue were within 19 cents of each other ($99.51-$99.70).

Dell's Q1 Beat: After the close Thursday, Dell reported quarterly earnings of $2.13 per share, which beat the analyst consensus estimate of $1.61 by 32.3%.

The company reported quarterly sales of $24.5 billion, which beat the analyst consensus estimate of $23.4 billion by 4.7%.

In addition, the company revised its debt paydown target for FY2022 to at least $16 billion upon completion of the previously announced spinoff of VMWare VMW.
PreMarket Prep's Take: When the issue was being covered on the show Friday, it was trading at the $100 area. Co-host Dennis Dick, who is long shares of the issue, said: “I own it from $50, not selling it and not buying it at $100.”

The author of this article noted that Dell had daily support at $99, and if that level was breached, there was no major support until the $95 area.

After a lower open, Dell rallied, but could only barely clear Thursday’s close ($99.70), reaching $99.73 before reversing course.

The discussion on the issue from Friday’s show can be found here: Disclosure: PreMarket Prep co-host Dennis Dick is long Dell. 

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