Updated from 9:42 a.m. EST

Wall Street had effusive praise for Dell's ( DELL) October quarter Friday, lauding the PC powerhouse for its cash generation and steady growth and sending the shares up almost 5%.

In recent trading the stock had gained $1.76 to $39.01.

At CIBC, analyst Ali Irani upgraded Dell to sector outperform from a sector perform rating, noting the company now expects to meet its $60 billion annual revenue target a year ahead of schedule, in fiscal 2006. He also raised his revenue target for next year to $56.3 billion from $54.8 billion and EPS estimate to $1.60 from $1.50.

"Concerns on Dell's margin and growth outlook should dissipate within a tailwind of declining component pricing, improving mix and bullish guidance," Irani wrote. His firm hasn't done recent banking for Dell.

"In our opinion, the most notable accomplishment in the quarter was Dell's superb balance sheet management," said Needham analyst Charlie Wolf in a Friday morning note, pointing to Dell's generation of $1.74 billion in free cash in the most recent quarter.

"In our opinion, this is a much more accurate measure of financial performance than earnings per share," wrote Wolf. "With revenue growth, the balance sheet has thrown off increasing amounts of cash." He has a buy on Dell, which he called his "No. 1 pick in the enterprise hardware market." Needham hasn't done recent banking for Dell.

The Round Rock, Texas-based outfit said after the bell Thursday that it posted third-quarter earnings of $846 million, or 33 cents a share, and sales of $12.5 billion, in line with its own guidance and analysts' estimates. Compared with last year's levels, revenue was up 18% and profit rose 25%.

Dell's operating profit rose to 8.8% of revenue, up from 8.6% a year ago and 8.6% in the prior quarter. The company said its profit levels reached a four-year high.

Dell forecast fourth-quarter guidance exactly as Wall Street expected, at $13.5 billion in sales and 36 cents a share in earnings. On a sequential basis, the outlook implies revenue growth of 8% and earnings growth of 9%.

"They had a great quarter," summed up Les Santiago of Piper Jaffray, who has a buy rating on the stock. His firm hasn't done any investment banking for Dell.

Santiago said he was expecting the company to beat the consensus estimate for earnings by a penny due to favorable declines in component costs. However, gains there were apparently offset by an increase in overhead costs as Dell invested in new infrastructure. The company recently outlined plans to build a 500,000 square foot PC assembly plant in North Carolina.

"The bigger story is that Dell's growth trajectory is not slowing and they're on track to get to a $60 billion revenue target for FY06," he said. Indeed, Dell's annualized fourth-quarter guidance gives a run rate of $54 billion -- not too far below the $60 billion level.

In the third quarter, Dell saw overall shipments jump 22%, aided by a 35% rise in notebook units -- a rate double that of the overall industry excluding Dell, according to the company.

Dell reported that U.S. business customers increased spending by a sturdy 20%, which helped fuel a 27% global growth rate in servers and storage.

By region, third-quarter sales growth was strongest in Europe, the Middle East and Africa, up 27% from year-ago levels.