Shares of Dell got a lift after Goldman Sachs moved from a bearish to bullish rating on the stock, after having a negative outlook for the company over the past two years. It also increased its target price, despite the company reporting disappointing results last month.
The brokerage said, “While we remain cautious on PC and server demand trends, we believe many of our long-held secular concerns have become consensus.” Therefore “sentiment and expectations” could begin to “tilt positively in 2013.”
The portion of the report that really caught investors’ eyes said that the company’s cash balance (roughly $3 per share) “provides some downside buffer as it produces opportunity for an LBO or levered recap under the right conditions.”
That said, the analyst said that with a market cap of $18 billion, a private equity acquisition could be difficult and that a more realistic prospect would be using the cash for strategic purposes or repurchasing shares.
Dell (DELL : NASDAQ : US$10.06), Net Change: 0.42, % Change: 4.36%, Volume: 61,471,851