The Dicker Data Ltd (ASX: DDR) share price is having a difficult time on Thursday.
At one stage today, the wholesale computer hardware and software distributor's shares dropped 8% to a multi-year low of $8.55.
This means Dicker Data shares have now lost 40% of their value over the last 12 months, as you can see on the chart below.
Why is the Dicker Data share price under pressure?
Investors have been selling down the Dicker Data share price this week after the company's unaudited full year results disappointed the market.
For the 12 months ended 31 December, Dicker Data reported a 25% increase in revenue to $3.1 billion but a small decline in net profit after tax to $73.4 million.
In response to the result, Goldman Sachs commented:
DDR's FY22 trading update was a relatively small miss to consensus (-3% on NPAT), which we previously flagged as a risk. […] however in our view the more pertinent issue is the risk of persistent cost headwinds heading into FY23.
The broker also spoke cautiously about Dicker Data's outlook due to a number of potential headwinds impacting demand. It said:
In our view demand headwinds may be the next risk for DDR based on (1) pull-forward of PC demand through COVID; (2) commentary from PC OEMs including Microsoft, HP and Dell suggesting a challenging FY23 demand backdrop; and (3) potential slowdown in consumer electronics spending as the impact of higher interest rates is felt in the economy.
Is this a buying opportunity?
The good news is that Goldman Sachs appears to believe that all this and more is now factored into the Dicker Data share price.
And while it has held firm with its neutral rating, its revised price target of $11.35 implies material upside potential for its shares of almost 33%.
Furthermore, it isn't the only broker that sees plenty of value in its shares. Morgan Stanley has retained its overweight rating with a $13.00 price target this morning. This represents over 50% upside over the next 12 months from current levels.
