Dell Stock Climbs In Return To Public Markets As VMware, Pivotal Gain

Shares in Dell Technologies (DELL) gained Friday as the information technology giant returned to the public markets after a five-year absence, also sparking gains in Dell-controlled VMware (VMW), Pivotal Software (PVTL) and SecureWorks (SCWX). Meanwhile, JPMorgan initiated coverage on Dell stock with an overweight rating.


The return to public markets came after Dell bought back shares that tracked its stake in software maker VMware (VMW), which it finished in November. Dell now comes full circle after going private in 2013 with the help of Silver Lake Partners, and then acquiring data storage system maker EMC for $67 billion in 2016. The debt-fueled acquisition gave Dell a controlling stake in VMware, a unit formerly controlled by EMC.

Friday’s move prompted JPMorgan analyst Paul Coster to set a price target of 60 on Dell stock.

“Dell is a formidable leader in IT client solutions,” Coster said in a report to clients. “It is with fuller integration of EMC and VMware that Dell is recapturing share in the IT infrastructure market, leveraging global sales capacity, manufacturing scale, product breadth, and technology differentiation to become a one-stop IT shop for customers in all geographies and market segments.”

Dell stock rose 3.9% to close at 45.41 on the stock market today. VMware stock climbed 2.7% to finish at 158.47.

Dell Products Span Storage, PCs, Servers, Software

Aside from VMware, Dell owns controlling stakes in Pivotal and cybersecurity firm Secureworks. Pivotal rose 2.2% to 15.99 on Friday. SecureWorks rose 4.6% to 16.27.

Dell competes with Hewlett Packard Enterprise (HPE) and others.

“The firm has reported 23 consecutive quarters of share gain in the PC market, and Dell is a leader in many infrastructure product categories, including storage, x86 servers, external storage arrays, hyper-converged infrastructure, client technology, and server virtualization,” Coster wrote.

One worry, though, is that Dell holds nearly $53 billion in debt and borrowing costs could rise.

Upbeat View

Morgan Stanley analyst Katy Huberty also had an upbeat view on Dell in her recent note.

“We see storage as the biggest opportunity to take share given the refresh of Dell’s midrange product line and improving sales productivity,” Huberty said.

Customers use VMware’s virtualization software in corporate data centers. The software enables computer servers to run different operating systems and apps, and share workloads.

VMware on Wednesday expanded its cloud-computing alliance with Amazon Web Services, the cloud unit of Amazon.com (AMZN).


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