Shares of Dell Technologies (DELL) - Get Dell Technologies Inc Class C Report were little changed Monday despite the company being the subject of a bullish note from Citi analyst Jim Suva, who named the PC maker the top stock for 2021.
Dell has risen more than 40% in 2020 amid surging PC demand and growing speculation that the company will spin off its controlling stake in VMware (VMW) - Get VMware, Inc. Class A Report toward the end of next year.
"Our new top stock for 2021 is Dell (DELL), and we are placing it on the US Focus List as PC strength near term is followed by enterprise strength in 2H with the added bonus of strategic corporate action of likely tax-free VMW spin out and special dividend after September," Suva said.
Dell shares were down 0.23% to $72.75 on Monday afternoon.
Dell is Citi's top large-cap pick in the technology hardware sector for 2021, while Jabil (JBL) - Get Jabil Inc. Report is the firm's pick for the top mid-cap stock in the sector owing to the fact that it is well-positioned in every Apple (AAPL) - Get Apple Inc. Report product.
Meanwhile, Citi gave sell ratings to several hardware makers, with Xerox (XRX) - Get Xerox Holdings Corporation Report, Hewlett Packard Enterprise (HPQ) - Get HP Inc. Report and GoPro (GRPO) all getting negative ratings from the firm for 2021.
"Our 2021 outlook is based on our view that the consumer strength recently experienced will be stronger for longer as demand for many products such as PCs, tablets, video cameras, wearables, and Apple products goes beyond the holiday season and sets up for a stronger than normal 1H 2021," Suva said.
Citi expects PC strength to continue into the first half of 2021, but thinks the cycle will face difficult second-half comps and show year-over-year declines.