CDW's stock has underperformed recently, falling nearly 10% year to date, while the broader market has reached record levels. Morgan Stanley analyst Erik Woodring believes that the stock's valuation is attractive, trading at 11 times forward earnings compared to the S&P 500's 20.9 and the Nasdaq-100's 25.
The upgrade from equal weight to overweight comes with a new price target of $170, suggesting a 38% upside from its recent close. Woodring noted that concerns about inflation and AI adoption impacting growth are overstated, and he expects positive revisions in estimates and a return to operating leverage in the second half of the year.
CDW has seen over 20% of its revenue driven by strong demand for servers, storage, and networking, which could support its stock price. Additionally, the company announced a $1 billion share buyback plan in May, which could further enhance shareholder value. The consensus among analysts is positive, with seven out of twelve recommending a buy or strong buy on CDW