Magic 25
I.I. Upgrades Dell to Buy After Sell-Off
We don't mean to confuse anyone folks. We are simply trying to make you money.
Dell Computer's (NASDAQ:DELL - news) fourth quarter results gave investors less than what they were hoping for and the stock took a dive Tuesday in after-hour trading. Now trading at about $80, the PC direct distributor's shares are very attractive. So attractive, in fact, that we are upgrading the stock to a 'buy,' considering the stock has already pulled back 15% from $94 on Friday, when we downgraded the stock to a 'sell.'
Additionally, a swarm of investment firms are maintaining their rating at 'buy,' including Piper Jaffray, Gerald Klauer, ING Baring Furman and Warburg Dillon Read. SG Cowen reiterated a 'strong buy' and Goldman Sachs reiterated Dell on their 'recommended list.'
Dell showed top line growth of 39%, versus prior years of 56%, and as Piper Jaffray's Ashok Kumar said, "they can afford to skip a beat once in a while." From an investment standpoint, he notes that Dell's 194%, five-year compounded return will keep investors coming back for more over the long-term.
"Don't Kill the Goose"
"You don't kill the goose that will lay the golden egg," Kumar adds. While he anticipated this selling pressure with "the competitive landscape is getting tougher," the news looks to be factored into the stock price already.
Bottom line:
At current levels Dell is a buy.
By Craig Schneider
Updated 2/17/99 with Dell at $80.94
Recommended 11/16/98 at $63.19
fnews.yahoo.com
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