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The Ratings Game: Dell stock downgraded as Goldman Sachs joins the chorus with PC-market concerns

Another analyst is taking a more cautious view of the market for personal-computers, prompting a downgrade of Dell Technologies Inc.’s stock.

Goldman Sachs analyst Rod Hall lowered his rating on Dell shares

to neutral from buy late Thursday, pointing to signs of moderating PC demand among low-end buyers and concern that higher-end PC demand could follow the same pattern.

“We also believe that higher inflation, fading stimulus support and macro events-led uncertainty is likely to lead to more cautious discretionary consumer spending as we progress through 2022,” he wrote in his note to clients.

Hall notes high average selling prices in the market, which he attributes to strong demand for premium devices and scant discounting. He expects that prices could “soften” in the second half of the year as the supply/demand balance improves and as demand for lower-end units further trails off.

Dell was previously on Goldman’s Conviction List, but Hall removed it from there in conjunction with his downgrade.

“Recall, our buy rating on DELL was primarily based on the value unlock opportunity for the company from the VMW [VMware Inc.] spinoff which has since been completed,” he wrote.

Hall isn’t the first analyst to voice concerns this week about the possible end of a pandemic-driven boom in the market for personal computers. A Morgan Stanley analyst downgraded shares of Dell and HP Inc.

Thursday, while a Barclays analyst cut his rating on shares of Advanced Micro Devices Inc.
citing potential risk in several of that company’s end markets, including PCs.

Shares of Dell were off 2.5% in Friday’s session, after declining 7.6% in Thursday trading. The stock has declined 13% over the past three months as the S&P 500

has lost 5%.

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