Jefferies Comments on Dell (DELL) Following Quarter, Still Collecting Splinters

Jefferies is reaffirming its Hold rating and $15 price target on shares of Dell (NASDAQ: DELL) following the release of its Q3 results.

The company released its third quarter results with earnings topping expectations and sales falling below. The firm notes that Dell was able to beat earnings expectations, despite competitor pricing aggression and demand weakness in certain segments, due to mainly focusing on its higher-margin businesses. This may have lead to a loss in market share in other segments. Jefferies believes many PC and storage company's will continue to use pricing as a growth creator.

Management increased its operating income guidance and highlighted that revenues for FY12 should be toward the lower end of its previous guidance. Dell also expects the HDD shortage to last multiple quarters, but believes the price increases will be more than offset by price declines in other components.

An analyst at Jefferies comments, "With the peak of enterprise PC upgrade coming closer it remains our view that Dell's EPS beats will be more difficult to duplicate. Additionally expensive software acquisitions are likely in the future as both HP and Oracle now have unstructured data intelligence layers."

For an analyst ratings summary and ratings history on Dell click here. For more ratings news on Dell click here.

Shares of Dell closed at $15.63 yesterday.

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