Dell Technologies Inc (NASDAQ:DELL) shares fell in early trade on Friday after the computer hardware and software firm reported mixed results for the fourth quarter and guidance below expectations.
Q4 earnings of $1.91 billion or $2.68 per share were ahead of Wall Street estimates of $2.52 but revenue of $23.9 billion missed the consensus $24.6 billion.
Analysts at UBS remain bullish on Dell, urging investors to buy any weakness in the company’s shares.
They noted that Dell’s first quarter EPS outlook was in line with their forecast but slightly below the consensus due to a softer near-term PC backdrop and revenue recognition challenges tied to a previously communicated shift in their graphics processing unit (GPU) product line.
Dell project Q1 fiscal 2026 EPS of $1.65, compared to Street estimates of $1.83.
First quarter revenue was projected to be between $22.5 billion and $23.5 billion, or $23 billion at the midpoint compared to the consensus $23.7 billion.
“While the shares could trade down on the Q1 EPS guidance and commentary gross margins should be down 100 basis points year-over-year owing to mix, we believe any weakness should be bought as the company’s initial guide has historically been conservative,” analysts wrote.
They noted that Dell initially guided revenue of $93 billion and EPS of $7.50 for fiscal 2025 to report revenue of $95.6 billion and EPS of $7.97, 3% and 6% higher respectively.
“Therefore, if history is a guide, Dell's fiscal year 2026 EPS could end up $9.85 versus the $9.30 guide and our $9.04 estimate,” they wrote.
“For fiscal 2026, Dell's guidance implies AI-optimized server revenue of at least $15 billion, up over 50% from approximately $9.8 billion in fiscal 2025 and better than our $13 billion estimate.”
UBS trimmed its price target on Dell to $150 from $158 to reflect a slight revision to free cash flow estimates and a lower multiple.
“At 15x, Dell shares would be trading at roughly a 30% discount to the S&P 500, tighter than the 50% discount over the trailing three years given solid AI-server revenue growth balanced by margins in line with the long-term financial framework,” they wrote.
Shares of Dell traded down 6.5% at about $100 shortly after the opening bell in New York.