Dell: Merrill Downgrades, Seeing Sharp Drop In PC Sales

Merrill Lynch analyst Jeff Fidacaro this morning lowered his rating on Dell (DELL) to Neutral from Buy, slicing his target on the stock to $13 from $22. “While Dell’s shares have been under pressure and valuation looks attractive…we are downgrading Dell…given our view of a sharp downturn in the PC market (especially in desktops), and a lack of catalysts to either reignite growth or gain share in the next few quarters,” he writes in a research note. Fidacaro now expects 2009 PC unit growth of -2%, down from positive 12%; for 2010, he now sees 5% growth, down from 10.5%. The cuts reflect deteriorating global business conditions, tighter IT budgets, weakening consumer spending and production cuts at contract manufacturers in Taiwan. He expects a weakening demand environment in the U.S. and Europe to spread to Asia and the emerging markets. One positive offsetting factor will be the growth in netbooks. He cuts his FY January 2010 EPS estimate to $1.20, from ... (link)