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Dell gains on upgrades, 1Q results

Dell Computer (Nasdaq: DELL) was up 13 percent Friday after it hurdled Wall Street estimates in its first quarter, and issued a bullish outlook.

Shares were up 5 9/64 to 49 53/64 Friday afternoon, getting some extra fuel from a couple of upgrades. Wasserstein Perella raised its rating on the stock from "hold" to "buy" and CE Unterberg Towbin lifted its rating from "buy" to "strong buy."

"We believe that this was a pivotal quarter for the company," said Merrill Lynch analyst Steve Fortuna in a research note. By beating the consensus, Dell has helped to rebuild investor confidence, he added. The report reiterated a "buy" rating, set a price target of $70 on the stock

While analysts were unanimous in their strong ratings on the stock, a report from US. Bancorp Piper Jaffray called the outlook for Dell "sunny with a possibility of shower." Analyst Ashok Kumar, who has a "buy, aggressive" rating and a 12-month price target of $65, said the company had upside from favorable component pricing and a benign competitive environment. But price pressures could increase in the second half and reverse gross margin trends.

"Uncertainty about corporate demand and summer weakness is expected to keep the stock in a $50 to $55 trading range," Kumar added.

After market close Thursday, Dell reported first quarter earnings of $525 million, or 19 cents a share, on sales of $7.3 billion. First Call Corp. had a consensus estimate of 16 cents a share.

Dell reiterated the outlook it stated in February. At that time, the company said it saw revenue growth in the low 30 percent range in 2000. "Our revenue goals and expectations for the balance of the year remain unchanged," CFO James M. Schneider said, during a conference call with analysts.

The direct PC vendor's outlook put to bed a lot of lingering Y2K fears. IBM (NYSE: IBM), Compaq (NYSE: CPQ) and Gateway (NYSE: GTW) are expecting better results in the second half.