Analyst Note| Mark Cash |
We are raising our fair value estimate to $80 from $75 for no-moat Dell Technologies after its first quarter. Revenue and earnings per share beat our expectations by a decent margin as the company reported broad-based growth. Upside was driven chiefly by the client solutions group, or CSG, which saw significant growth in demand for computers from the commercial and consumer sectors, and a return to growth in the infrastructure solutions group, or ISG. We are encouraged by Dell’s broad-based expanding addressable markets, as the company continues to benefit from accelerated trends toward digitalization, remote working and learning environments, and cloud-based infrastructure. We believe the secular trends of organizations accelerating the adoption of digitalization, cloud-based infrastructure, and facilitating remote working and learning environments, are aligned with Dell’s core capabilities, and the company is executing well. With shares trading in the mid- to high $90 area, we continue to view shares as slightly overvalued.