Citi maintains Buy rating on Dell with $125 stock target

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Citi maintains Buy rating on Dell with $125 stock target
Credit: © Reuters.

On Monday, Citi reaffirmed its Buy rating on Dell Technologies Inc (NYSE: DELL ) with a stock price target of $125.00. This confirmation comes in the wake of a recent report by the Financial Times on March 25, which disclosed that China is initiating a phase-out of US microprocessors, specifically those produced by INTEL and AMD (NASDAQ: AMD ).

The Chinese government's new directives are part of a broader push to replace foreign-branded personal computers with locally manufactured ones, a campaign that has been ongoing since 2022.

The analyst from Citi highlighted that, according to data from IDC, approximately 5% of China's PC unit share in 2023 was attributed to government purchases, with the combined commercial sector (government and enterprise) accounting for about 43% of the total market.

Dell and HP (NYSE: HPQ ), as major players in the PC industry, derive between 5-7% of their total China PC revenue from this segment, which includes both government and enterprise sales.

Despite the potential challenges posed by China's new policy, Citi's stance on Dell remains unchanged. The analyst believes that the risk to Dell's business is relatively contained. The firm's analysis suggests that the impact on Dell's revenue from China, given the current market share and the scope of the government's directives, should not significantly alter the company's overall financial health.

Citi's continued support for a Buy rating on Dell indicates confidence in the company's ability to navigate the evolving technological and geopolitical landscape. The $125.00 stock price target suggests that Citi sees potential for Dell's stock to perform well despite the recent developments in China's technology procurement policies.

Investors and market watchers will likely monitor how Dell and other US-based PC manufacturers adjust their strategies in response to China's shifting regulatory environment. For now, Citi's assessment provides a measure of stability in the face of these regulatory changes.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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