Morgan Stanley raised Dell Technologies Inc (NYSE:DELL) to Overweight from Equal-Weight and HP Inc (NYSE:HPQ) to Equal-Weight from Underweight in a note to clients on Tuesday.
Analysts at the firm also raised their price targets on the stocks, with Dell's lifted to $55 from $45 and HP's increased to $31 from $28 per share.
The analysts wrote that they decided to raise Dell on the back of its attractive valuation, cyclical PC tailwinds, and the fact it has a path toward accelerating shareholder returns.
"Over the past year, DELL shares have underperformed the S&P 500 by 14 points, driven negative earnings revisions and ~2x turns of P/E contraction. However, with the PC market showing signs of bottoming in C1Q23 we are getting more constructive on DELL," wrote the analysts, who added that the PC market is forming a bottom, and they "want to own DELL for the cyclical PC market rebound."
HP was also raised based on the broader market recovery, although the analysts acknowledged that broader risks remain.
"We expect the company to participate in the PC 'trade' via valuation multiple expansion, but risks such as a back-end loaded FCF ramp, slowing capital returns, and a more challenged printing business are likely to limit outperformance," they explained.