Dell Technologies Inc.

DELL Details

Dell Technologies Inc. (NYSE: DELL) is a company that specializes in information technology. It creates, develops, manufactures, markets, sells, and supports a diverse set of integrated solutions, products, and services. Its three business units are Infrastructure Solutions Group (ISG), Client Solutions Group (CSG), and VMware.

Latest News:

• VMware Spin-Off Special Dividend: DELL announced a special stock dividend to all investors of VMware, Inc.'s Class A and Class B common stock on October 19, 2021. In addition, it stated that all DELL shareholders, as of October 29, 2021, will receive a distribution of shares. VMware's spin-off by DELL is set to be finalized on November 01, 2021 (Distribution Date).
• New Telecom Offerings: DELL unveiled new telecom software, solutions, and services on October 13, 2021, to assist communications service providers (CSPs) in accelerating their open, cloud-native network deployments and generating new income at the edge.

H1FY22 Results:

• Growth in Revenues: The company's revenues increased 13.40% to USD 50.61 billion in H1FY22 (ended July 30, 2021) from USD 44.63 billion in H1FY21, owing to a growth in both the products and services divisions.
• Increase in Net Income: The net income for H1FY22 was USD 1.82 billion vs. USD 1.28 billion reported in H1FY21.
• Leveraged Balance Sheet: As of July 30, 2021, the company's cash and cash equivalents stood at USD 11.72 billion, with a total debt of USD 43.59 billion.

Key Risks:

• Dependence on Third-Party Manufacturers: Many of DELL's goods and components come from third-party vendors, many of which are outside the US. Furthermore, contract manufacturers assemble a large number of the company's products, especially in Asia. As a result, any delays in collecting the required amount or unfavorable expenditures might skew its production, putting its entire running status at risk.

Outlook:

• Long-Term Revenue and EPS Estimate: DELL intends to compound its annual sales growth by 3% to 4% and yearly non-GAAP diluted profits per share growth by over 6% through FY26 as of September 23, 2021.
• Q3FY22 Estimate: It also anticipates its Q3FY22 results to be steady, with YoY revenue growth ranging from mid-to-high teens and operating income growing 1% to 2% on a sequential basis.

Valuation Methodology: Price/Earnings Per Share Multiple Based Relative Valuation

(Analysis by Kalkine Group)

* % Premium/(Discount) is based on our assessment of the company's NTM trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks.

DELL Daily Technical Chart (Source: REFINITIV)

Stock Recommendation:

DELL's share price has surged 67.84% in the past twelve months and is currently trading around the higher-band of the 52-week range of USD 58.88 to USD 114.77. The stock is currently trading above its 50 and 200 DMA levels, and its RSI Index is at 75.81, indicating an overbought zone. We have valued the stock using the Price/Earnings-based relative valuation methodology and arrived at a target price of USD 99.44.

Considering the significant uptick in the stock price and other technical indicators, we believe the decent business fundamentals are adequately reflected at the current trading levels. Hence, we recommend a "Sell" rating on the stock at the current price of USD 114.43, down 0.10% as of October 25, 2021, 9:32 AM ET.

* The reference data in this report has been partly sourced from REFINITIV.

* All forecasted figures and industry information have been taken from REFINITIV.

Akamai Technologies, Inc.

AKAM Details

Akamai Technologies, Inc. (NASDAQ: AKAM) develops and sells internet-based solutions for safeguarding and delivering information and business applications. Its internationally dispersed platform has over 325,000 servers spread over 130 countries. It presently has only one business segment: cloud services for distributing, optimizing, and safeguarding information and business applications via the internet.

Latest News:

• Acquisition of Guardicore: On October 21, 2021, AKAM announced the completion of its acquisition of Guardicore, a leading segmentation firm challenging the traditional firewall industry based in Tel Aviv, Israel, for a total consideration of around USD 600 million.
• New Platform Launch: AKAM announced the introduction of Learn Akamai on September 14, 2021, a free, on-demand learning platform designed to help clients quickly and easily realize the total value of its technologies.

H1FY21 Results:

• Rise in Sales: The company increased 8.76% in revenues to USD 1.70 billion in H1FY21 (ended June 30, 2021) compared to USD 1.56 billion in H1FY20 due to growth across its security products portfolio.
• Boost in Bottomline: AKAM witnessed an increase in net income to USD 312.19 million in H1FY21 vs. USD 285.06 million in H1FY20.
• Adequate Balance Sheet: As of June 30, 2021, the company had a cash balance (including marketable securities) of USD 1.42 billion, with total debt amounting to USD 1.94 billion.

Key Risks:

• Reliance on Third-Party Network Providers: AKAM relies on third-party telecommunications network providers for transmission capacity and the availability of co-location facilities to house its servers to run its network. Therefore, failure to put in place the ability it needs to run its business successfully might result in a reduction in, or interruption of, service to its customers, and ultimately, a customer loss.

Valuation Methodology: Price/Earnings Per Share Multiple Based Relative Valuation

(Analysis by Kalkine Group)

* % Premium/(Discount) is based on our assessment of the company's NTM trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks.

AKAM Daily Technical Chart (Source: REFINITIV)

Stock Recommendation:

AKAM's share price has been reasonably stable throughout twelve months and is currently trading around the mid-band of the 52-week range of USD 92.64 to USD 124.91. The stock is currently trading below its 50 and 200 DMA levels, and its RSI Index is at 56.36. We have valued the stock using the Price/Earnings-based relative valuation methodology and arrived at a target price of USD 98.87.

Considering the current market price and other technical indicators, we believe the decent business fundamentals are adequately reflected at the current trading levels. Hence, we recommend a "Sell" rating on the stock at the current price of USD 108.59, up 0.61% as of October 25, 2021, 12:09 PM ET.

* The reference data in this report has been partly sourced from REFINITIV.

* All forecasted figures and industry information have been taken from REFINITIV.

Disclaimer

The advice given by Kalkine Canada Advisory Services Inc. and provided on this website is general information only and it does not take into account your investment objectives, financial situation and the particular needs of any particular person. You should therefore consider whether the advice is appropriate to your investment objectives, financial situation and needs before acting upon it. You should seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice) as necessary before acting on any advice. Not all investments are appropriate for all people. The website www.kalkine.ca is published by Kalkine Canada Advisory Services Inc. The link to our Terms & Conditions has been provided please go through them. On the date of publishing this report (mentioned on the website), employees and/or associates of Kalkine do not hold positions in any of the stocks covered on the website. These stocks can change any time and readers of the reports should not consider these stocks as advice or recommendations later.