By Dhirendra Tripathi
Investing.com – Dell Technologies stock (NYSE:DELL) traded 4% higher Monday on being added to Goldman Sachs' (NYSE:GS) conviction list while the brokerage said it sees near term value.
Analyst Rod Hall sees strong cash flows and a clear road map for a debt paydown as factors pushing Dell. He put a Street-high target of $137 on the stock, an upside of 28%.
According to Hall, Dell is trading at a discount to its peers.
Dell anticipates cash proceeds of around $9.5 billion from the VMware (NYSE:VMW) special dividend post proposed spinoff and around $4 billion from the sale of its data integration company Boomi which together would help exceed its debt pay down target of more than $16 billion by the end of this financial year, the analyst wrote in his note, according to StreetInsider.
The analyst believes that once the transactions are complete, the company’s leverage will be down to around 1.3 times, which compares to the steady state leverage target of 1.5 times. This will put standalone Dell in a manageable leverage position, Hall wrote in the note, as per StreetInsider.
Dell is spinning off its 81% stake in VMware, and the transaction is likely to close next month, according to reports.