"We believe investor sentiment on DELL shares has gotten too positive and arguably complacent," said the firm, which has a $15 price target on the stock. "What we find interesting is that consensus CY12 estimates call for 2% top-line growth and a 4% decline in EPS. This compares to peers IBM, AAPL, CSCO, and HPQ, where most are looking for high-single-digit to low-double-digit EPS growth."
Sterne Agee sees 15%-20% downside risk in the stock at current levels, arguing that the company is in a transitional phase but isn't being aggressive enough.
"We believe DELL remains in a tough competitive position sandwiched between lower-cost players ( Lenovo and Acer) and AAPL encroaching more in its core PC business as Macs and iPads gain share," the firm said. "Despite efforts to grow beyond a PC company, we estimate 70%-75% of its business is tied to PCs. This includes peripherals, software, and services. In addition, we see HPQ, IBM, and CSCO competing more in its core market in small-medium business (SMB) and servers."
The later roster of reporters also includes Brocade Communications (BRCD), Cheesecake Factory (CAKE), Chesapeake Energy (CHK), Chiquita Brands International (CQB), Diamond Foods (DMND), Encore Wire (WIRE), Extra Space Storage (EXR), Forest Oil (FST), Grand Canyon Education (LOPE), Herbalife (HLF), Intuit (INTU), KongZhong (KONG), Kraft Foods (KFT), La-Z-Boy (LZB), LoJack (LOJN), LookSmart (LOOK), Nabors Industries (NBR), Papa John's International (PZZA), Sonus Networks (SONS), Sourcefire (FIRE) and Winn-Dixie Stores (WINN).The action in shares of Baidu (BIDU - Get Report) will also be interesting to watch on Tuesday. The volatile stock got a 3%-plus haircut on Friday after the China Internet search provider's quarterly report. The earnings were above consensus, but the company's outlook for revenue of $666.5 million to $688 million in its fiscal first quarter does represent a sequential decline from its fourth-quarter total of $710.9 million. Over the weekend, China reportedly asked Baidu to help control "harmful" information on the Internet. Jefferies kept its buy rating and $200 price target on Baidu shares following the report, saying the company's "growth outlook is intact as traditional offline and brand advertisers increase spending on search marketing." The firm wasn't put off by Baidu's guidance and underlined how quickly the company is growing by noting it added 5,200 employees in 2011, including 1,400 in the fourth quarter, to bring total headcount to more than 16,000. "Baidu guided 1Q12 total revenue at RMB4.195bn-4.33bn, representing 72.2-77.7% YoY growth or 3.2-6.2% QoQ decline," Jefferies said. "The QoQ decline is mainly due to weaker seasonality for online ads in 1Q11. The midpoint of the guidance (RMB4.26bn) is 12.3% higher than our previous forecast (published on January 30), and in line with consensus." Baidu shares closed Friday at $136.90, down 3.5%, with volume reaching nearly 16 million, more than two times its three-month trailing daily average of 6 million. Year-to-date, the stock is up 17.5%, pushing its forward P/E to 21.2. Check out TheStreet's quote page for Baidu for year-to-date share performance, analyst ratings, earnings estimates and much more. And finally, the decision on releasing the next round of bailout money for Greece should come later Monday with Eurozone leaders and representatvies from the International Monetary Fund, and the European Central Bank and private creditors meeting in Brussels. The big deadline is March 20, but Greece needs the funds now so it can move ahead on a debt relief deal with said private creditors. The feeling is that getting a deal done is down to the details, according to The Associated Press. "Greece comes into today's Eurogroup meeting having fulfilled all the requirements for the approval of the new program," Greece's Finance Minister Evangelos Venizelos told the AP on Monday. "For Greeks, this is a matter of national dignity and a national strategic choice and no other integrated and responsible choice can be opposed to it." -- Written by Michael Baron in New York.
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