Goldman Sachs Upgrades & Downgrades in Tech (IBM, EMC, NTAP, CA, DELL, ARW, HPQ, STX, WDC, AAPL, MSFT, ORCL, SYMC)

Goldman Sachs is out with some key calls in technology sector today.  While some calls are positive, our take on this is more of a cautious stance due to the broad nature of some of the downgrades.  Among the individual calls is a downgrade of IBM (NYSE: IBM) to Neutral rather its prior “Buy” rating based on limited upside to its $120 target.  Both EMC (NYSE: EMC) and NetApp, Inc. (Nasdaq: NTAP) were resumed with coverage with “Neutral” ratings. CA, Inc. (NYSE: CA) was also downgraded to Neutral from Buy.

The firm raised Dell Inc. (NASDAQ: DELL) to the Conviction Buy List based on its operating leverage and a return in teh second half for PC sales.  Goldman is also reiterating the “Buy” ratings on both Arrow Electronics, Inc. (NYSE: ARW) and Hewlett-Packard (NYSE: HPQ). Arrow is based on its operations and its relative underperformance.  The call in H-P is based upon some recovery in the printer business and on some expected strength in the second half for the PC sector.  On the storage side, Seagate Technology (NASDAQ: STX) was raised to “Buy” from Neutral, while Western Digital Corp. (NYSE: WDC) was cut to Neutral from Buy.

Apple Inc. (NASDAQ: AAPL) was maintained as Buy rating and saw its price target raised to $160 from $145.  On the software side, Microsoft Corporation (NASDAQ: MSFT), Oracle Corp. (NASDAQ: ORCL), and Symantec Corporation (NASDAQ: SYMC) remain its favorite picks.

The ratings for the sector are attractive.  There is good news here, but the sector call is broad enough that the impact may be limited.  And some of the caution may further weigh on the otherwise would-be winners today.

Jon C. Ogg
July 10, 2009