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“Given significant correlation of stock price performance and EPS estimate revisions, we remain selectively biased towards those companies who 1) are strongly positioned towards those areas that are poised for recovery, 2) mix shift enabled margin expansion and 3) de-risked estimates,” they said in an initiation note.
Along these lines, the analysts initiated coverage on Dell Technologies (NYSE:DELL) and CDW (NASDAQ:CDW) with a Buy rating and $60 and $205 price targets, respectively.
“We like Dell’s leading share in commercial PCs, return to normalized FCF margins which could drive an uptick in shareholder returns, reduction in core debt leverage, along with the potential for inclusion in the SP500 index an incremental catalyst. Estimates have also been significantly de-risked given a conservative guide,” they wrote.
On CDW, the analysts highlight near-term upside that could arise from ~30% exposure to the PC market.
