Investors should have faith in Dell despite short-term challenges, Goldman Sachs said. Analyst Michael Ng initiated Dell coverage with a buy rating. The $43 price target suggests the stock will gain 15.5% over the next year from where it closed on Friday. Weakness in the demand for personal computers creates headwinds, but he said that should subside soon. That’s because there are six quarters of computer demand too, and a typical cycle requires between four and six quarters to hit the bottom, he said. “Although we recognize that DELL’s business is highly cyclical, we believe that DELL’s valuation is attractive at 7X NTM P/E and its long-term target is at least 100% FCF for net income conversion to finance shareholders’ capital return,” Ng said in a note to clients. abide. Ng also said the company should benefit from the replacement cycle of new computers purchased during the pandemic. The company is also guiding revenues from its infrastructure and client solutions group to decline in mid-teens percentage from 2023 to 2024 due to a challenging backdrop, Ng said. Beyond the slide in corporate spending, companies have reported early signs of demand for storage, particularly among small and medium-sized businesses. But he said the prospect of a return to growth and demand should improve investor sentiment and servers and storage Dell should be able to maintain or gain share value. While he predicts the infrastructure solutions group’s revenue should decline 14% in fiscal 2024, it should grow 4% in fiscal 2025 and beyond. Client solutions group revenue should also decline 14% in fiscal 2024 before posting growth of 3% in fiscal 2025 and 1% in fiscal 2026. The long-term financial model also remains strong with revenue growth between 3% and 4% and earnings per share growth of at least 6%, Ng said. Additionally, Dell should see at least 100% conversion of net income into free cash flow, with between 40% and 60% of free cash flow going back to shareholders. Ng also said the company’s price-to-earnings ratio of 7 over the next 12 months makes the stock attractive. – CNBC’s Michael Bloom contributed to this report.