Are Wall Street Analysts Bullish on CDW Corporation Stock?

CDW Corporation (CDW), based in Vernon Hills, Illinois, is a leading provider of technology solutions for business, government, education and healthcare. With a market capitalization of $23.6 billion, CDW offers a broad range of hardware, software and integrated IT services, enabling companies to thrive in the digital age.

CDW shares have significantly underperformed the overall market over the last year. The stock is down 17.8% in that time frame, while the broader S&P 500 index ($SPX) is up nearly 31.8%. In 2024, the stock is down 22.3%, while SPX is up 25.8% year-to-date.

CDW narrowed its focus and also underperformed the Technology Select Sector SPDR Fund (XLK), which returned 25.6% over the past 52 weeks and returned 20.3% year-to-date.

CDW Corporation underperformed the broader market last year due to challenges in the hardware solutions segment, including extended sales cycles, macroeconomic uncertainties and increasing competition. These factors, particularly a 12% decline in government public sector sales, have impacted the company’s performance.

On October 30, CDW shares fell 11.3% after the company reported mixed third-quarter results. Adjusted earnings per share of $2.63 and revenue of $5.5 billion fell short of Street forecasts. Despite maintaining a stable gross margin of 21.8%, both non-GAAP operating income and non-GAAP net income per share declined 4% and 3%, respectively. Additionally, the company’s outlook for the remainder of 2024 assumes flat U.S. IT market conditions and a low single-digit decline in gross profit.

For the current fiscal year ending in December, analysts expect CDW’s earnings per share on a diluted basis to decline 5.8% to $8.99. The company’s earnings surprise story is mixed. The company missed consensus estimates in three of the last four quarters and exceeded forecasts on another occasion.

Among the 12 analysts covering CDW stock, the consensus rating is Moderate Buy. This is based on six Strong Buy ratings, one Moderate Buy rating, and five Holds ratings.

This configuration is more optimistic than a month ago, with five analysts suggesting a “Strong Buy.”

On November 15, Redburn-Atlantic initiated coverage on CDW Corporation with a “Buy” rating and a $230 price target. The company highlighted CDW’s strong product positioning and growth potential in the underpenetrated UK market as key reasons for its positive outlook. Despite some near-term weakness, Redburn-Atlantic views this as temporary and expects CDW to benefit as discretionary spending recovers.

The Company expects CDW’s solid product portfolio and market presence to result in future earnings growth and possible revaluation. The price target reflects confidence in CDW’s growth and market-leading position.

The average price target of $227.64 represents a 28.8% premium to CDW’s current price level. The Street high price target of $250 suggests an upside potential of 41.4%.

At the time of publication, Kritika Sarmah did not hold (either directly or indirectly) any positions in any of the securities mentioned in this article. All information and data in this article are for informational purposes only. For more information, please see Barchart’s disclosure policy here. More news from Barchart

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.