By Dhirendra Tripathi
Investing.com – Dell Technologies (NYSE:DELL) was a strong gainer premarket Thursday after the company’s decision to spin-off its 81% stake in VMware (NYSE:VMW).
Deutsche Bank (DE:DBKGn) analyst Sidney Ho reiterated a ‘buy’ and raised the price target to $120 as the VMware spin-off could potentially unlock around $20 per share of value for the IT company. The target price is almost 30% higher than Dell’s closing price Wednesday.
Similarly, Wells Fargo’s Aaron Rakers reiterated an ‘overweight’. He too raised his price target for each Dell share to $120.
Dell is seen as a top pick for an enterprise IT spending recovery.
The company’s plan will see VMware distribute a special cash dividend of $11.5 billion-$12 billion to all VMware shareholders. Dell will use the proceeds from that to cut its debt.
Dell and VMware will enter into a partnership agreement later with VMware continuing to use Dell Financial Services.