Dell stock forecast: is Dell a good stock to buy?
After the VMware spin-off, Dell's stock has surged. What is the latest price forecast?
Dell Technologies first announced plans in April to shed its 81% stake in VMware, widely regarded as its most valuable asset, to create two standalone companies.
This spin-off, completed on 1 November, was completed through a special dividend of almost 30.7 million shares of VMware class A common stock and 307 million shares of VMware class B common stock distributed to Dell’s stockholders.
The deal, which will put around $12bn in the pockets of Dell shareholders, will help to cut into the legacy of debt that it acquired upon purchasing VMware's parent company EMC in 2015 for $67bn.
But what does this mean for the Dell share price forecast? Let’s first take a closer look at the details
Dell then acquired EMC, a data storage and management company, for $67bn in 2015. The deal faced considerable legal and regulatory obstacles along with extensive shareholder scepticism.
VMware, a virtualisation company, was first taken public in 2007 by EMC, which acquired VMware in 2004.
On 28 December 2018, Dell went public again. Considered the jewel of the crown, VMware was valued by the market as by far Dell’s greatest asset, with the implied equity of the rest of the tech giant valued by the giant at a negligible price for a period of time.
Since spring 2020, however, the Dell stock price has surged.
The spin-off, the plans for which were disclosed in a press release in April 2021, has sent Dell stock even higher. The Dell price has more than doubled since it was made public again in 2018.
Company founder Michael Dell said: “By spinning off VMware, we expect to drive additional growth opportunities for Dell Technologies as well as VMware, and unlock significant value for stakeholders.”
He continued: “Both companies will remain important partners, providing Dell Technologies with a differentiated advantage in how we bring solutions to customers.
“At the same time, Dell Technologies will continue to modernise its core infrastructure and PC businesses and embrace new opportunities through an open ecosystem to grow in hybrid and private cloud, edge and telecom.”
After the spin-off, Dell will remain as CEO and chairman of Dell and as chairman of the VMware board, according to a release by the company.
As a result of the dividend payment, Dell can make a further dent in its longstanding debt, which stood at $32bn at the end of July 2021.
According to Krish Sankar, an analyst at Cowens, after the spin-off, Dell will be “a simpler company with a better capital structure”.
But what does the spin-off mean for the Dell stock forecast? Will the Dell share price continue to go up?
Let’s first look at the historic performance of Dell stock.
After going public once more on 28 December 2018, the Dell share price was $23.03. By 16 May 2019, Dell stock was worth $35.38.
Despite dropping for the remainder of 2019, reaching a low of $12.93 on 18 March 2020, the price began to pick up in April. This was in part due to healthy profits off the back of PC sales during the pandemic.
On 16 October 2020, the Dell stock price hit $35.55. The rally continued, intensifying by April 2021 off the back of the spin-off plans. By 16 April 2021, the stock passed the $50 mark.
Despite plateauing for several months, in late September 2021 the stock began to take off again before surging at the end of October. Since then, the price has stayed high. As of 25 November, Dell stock price stands at $57.28.
While the market is no doubt responding well to Dell stock off the back of the spin-off, what does the future hold for the Dell stock forecast 2022? Or the Dell stock forecast 2023? Or even the Dell stock forecast 2030? Let’s look at what analysts think…
Dell stock predictions : expert opinion
Out of 18 analysts polled by the Financial Times, the most optimistic of the bunch estimates a 12-month price target of $116.90, more than double compared with today. The low end for Dell stock comes in at $59.00, an increase of just 7%. The median estimate represents a 20.6% increase from today's price to $66.50.
From a consensus recommendation by the FT, four experts have put a buy recommendation, eight analysts believe Dell will outperform the market, eight advise a hold, and no analysts believe it will underperform the market or have put a sell rating on the stock.
Yahoo Finance has a similar outlook, with four analysts rating Dell stock a strong buy, 10 a buy, 5 a hold – and none predicting an underperformance or suggesting a sell.
With profit margins at healthy levels and core debt dropped to manageable levels, the future looks bright for the hardware giant.
Despite more than half its revenues coming from laptops and computers, Dell also sells equipment for corporate data centres. Dell has also invested considerably in edge-computing technologies, which will help to exploit the potential of 5G.
Investment in this market could help to drive profit in the future. With promising future developments and a leaner structure, the future for Dell stock forecast might look optimistic. However, no one ever knows what bus is going to come around the corner, and you should be aware that disaster can strike any company.
It might be. The Dell stock price has been surging especially throughout November since the spin-off. Four analysts from the FT have issued a buy rating as part of their Dell stock forecast.
However, it is important to do your own research and remember that regardless of forecasts, prices can go up or down.
Some analysts think Dell stock is undervalued, with some FT experts believing the price of Dell could double in the next 12 months. However, it’s important to remember that the Dell stock price has already risen a significant amount recently and there are many unknowns that could affect the future price of the stock.
Investing is a highly personal endeavour and a suitable investment choice for one person may not be the same for another. Each investor has a different amount of capital to invest as well as different financial goals. Never invest more than you can afford to lose.
Dell certainly looks like it could be heading in a promising direction and with debt lowered and a simplified business structure, it may well prove to be a solid investment.