Dell Q1 Earnings Preview: Navigating Challenges in a Competitive Market

DELL Stock

Computer hardware manufacturer and networking solutions provider Dell Technologies (DELL:NYE) is set to announce its first-quarter financial results for Fiscal 2024 on June 1, 2023. As the PC/Server market faces ongoing weakness, Dell’s upcoming earnings report is expected to reflect the impact on its financial performance. While hopes of a cyclical bottom have bolstered DELL stock, economic uncertainties and a slowdown in IT spending may pose challenges, particularly for the Client Solutions Group (CSG) segment.

 

Anticipated Revenue Decline:

During Dell’s Q4 Fiscal 2023 conference call, the company already indicated its expectation of a sequential decline in top-line performance. Weaker demand trends are projected to result in Q1 revenue that is seasonally lower than average, potentially decreasing by 17% to 21%. Additionally, currency movements are predicted to have a negative impact of around 3%. The Infrastructure Solutions Group (ISG) segment is expected to decline quarter-over-quarter by approximately mid-20s, while the CSG segment may experience a mid-teens rate drop in Q1 revenue.

 

DELL Stock-Analyst Estimates:

Analysts are estimating that Dell’s revenue for the first quarter will reach approximately $20.27 billion, reflecting a year-over-year and sequential decline of 22% and 19%, respectively. Despite the weakness in sales, Dell’s gross margin is projected to remain relatively flat on a quarter-over-quarter basis. The company has provided guidance for Q1 earnings per share (EPS) at $0.80, plus or minus $0.15, reflecting a significant sequential decline due to the challenging top-line performance. Wall Street analysts expect DELL to report earnings of $0.86 per share, compared to $1.84 in the prior-year quarter and $1.80 in the previous quarter.

DELL Ratings by Stock Target Advisor

DELL Stock-Analyst’s Perspective:

Ahead of the Q1 earnings release, Evercore ISI analyst Amit Daryanani raised Dell’s price target to $55 from $50, expressing optimism about the stock’s performance. Daryanani added DELL to the firm’s “Tactical Outperform” list and expects the company to meet or slightly exceed consensus estimates in Q1. Furthermore, the analyst anticipates stabilization and recovery in the PC market in the upcoming quarters.

 

The Takeaway:

According to consensus analyst ratings, Dell stock currently holds a Strong Buy recommendation, with 10 Buy and two Hold recommendations. Despite this positive sentiment, the average price target of $48.29 implies a slight downside potential of 0.45%.

DELL Ratings by Stock Target Advisor

As Dell faces the challenges posed by a competitive market and the ongoing weakness in the PC/Server segment, investors will closely monitor the company’s Q1 earnings report for insights into its ability to navigate these headwinds successfully.

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