Zacks Investment Research upgraded shares of EMC Corporation (EMC) from UNDERPERFORM to NEUTRAL on May 28, 2013, with a target price of $25.00.
EMC reported better-than-expected first-quarter results on the back of higher revenues. However, operating margin contracted due to lower gross margin base. We believe that sluggish worldwide IT spending and cut-throat competition in the storage market will continue to impact the company's results in the near term. Moreover, integration risks related to frequent acquisitions, unfavorable foreign currency effects and increasing pricing pressure will hurt profitability over the long term. We believe that the company's vast product portfolio that caters to every budget will boost its customer base in the near term. Moreover, new customer wins, strong cash flow generation and aggressive share buyback will drive growth, going forward. We therefore, upgrade our recommendation from Underperform to Neutral and set a price target of $25.00.
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