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Why Dell’s Stock Price Is Climbing Towards $100 Per Share

Here’s why investors are betting that Dell Technologies stock will climb to $100 per share or more in 2021.

Dell Technologies stock continues its steady upward projectory towards the $100 per share threshold as investors and financial analysts are bullish about the $94.2 billion infrastructure and PC giant’s growth prospects.

Deutsche Bank analyst Sidney Ho recently upped his price target on Dell’s stock to $100 per share, up from $94 per share, noting that Dell’s shares have outperformed most other IT hardware stocks as well as the broader stock markets. Ho said in a recent note that Dell’s full year 2022 revenue guidance – in which Dell is predicting total annual sales growth in the low to mid-single digit range -- could be too conservative as the company should see “a nice uptick” in enterprise sales during the second half of 2021.

Similarly, Morgan Stanley analyst Katy Huberty this month raised the financial firm’s price target on Dell Technologies from $98 per share to $107 per share. Huberty said the firm conducted a survey of Chief Information Officers (CIOs) which pointed to a more robust IT spending recovery.

[Related: 6 Top Dell Execs Who Left The Company This Year]

Last week, IT research firm Gartner announced a major revision in its global IT spending forecast for 2021, projecting greater growth than initially believed as the world emerges from the COVID-19 pandemic. Gartner is now expecting IT spending to rise 8.4 percent in 2021 to $4.07 trillion, up from Gartner’s estimate in January of $3.92 trillion.

Gartner went even further and estimated that 2022 IT global spending will reach $4.3 trillion, up 5.5 percent compared to 2021. This increase in worldwide spending on technology such as storage, servers and PCs has many investors bullish on Dell.

Deutsche Bank last week named Dell a top recovery idea. “We believe its shares will continue to outperform as IT spending recovers as we go through this calendar year,” the firm said in a research note.

Dell’s stock is trading at $93.12 per share today, up 130 percent from $40.46 per share on April 13, 2020.

Evercore senior managing director of Equity Research, Amit Daryanani, recently raised the firm’s target price on Dell from $88 per share to $105. Daryanani said Dell’s shares could be worth far more if the company successfully executes on its proposed spin-off of its 81 percent stake in VMware to shareholders.

Round Rock, Texas-based Dell owns an 81 percent stake in VMware stemming from Dell’s acquisition of EMC in 2016. Dell will likely spin off its majority stake in VMware later this year to current Dell Technologies and VMware shareholders. Dell hopes the move will quickly boost its credit rating, achieve an investment grade rating, attract new investors, simplify its capital structure and potentially lower Dell’s debt stemming from the EMC acquisition via a special cash dividend.

“As both companies have stated, we believe a tax-free spin could drive shareholder, team member and customer value by simplifying capital structures and enabling flexibility,” Dell’s CEO Michael Dell told CRN earlier this year.

If all goes as planned, Dell will not spin off its shares of VMware before September 2021 for tax reasons. Dell is seeking to qualify the plan as tax-free for federal income tax purposes.

Finally, Dell is coming off a record fiscal 2021 that ran from January 2020 to January 2021. The company generated an all-time high of $94.2 billion in total sales, up 2 percent year over year, thanks to a surge in Dell’s Client Solutions Group -- which includes PCs, Chromebooks, notebooks, thin clients, printers, monitors and accompanying software and security – that reached a record $48.4 billion in sales.

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