Citi has selected Dell Technologies as it top stock pick for next year.

Dell stock has surged more than 40% this year amid surging PC demand and growing speculation that the company will spin off its controlling stake in VMware toward the end of 2021, Barron's reported. 

Hardware analyst Jim Suva on Monday named the computer company (DELL) his top stock for 2021, adding the company to Citi’s “U.S. Focus List.”

“Our 2021 outlook is based on our view that the consumer strength recently experienced will be stronger for longer as demand for many products such as PCs, tablets, video cameras, wearables, and Apple products goes beyond the holiday season and sets up for a stronger than normal 2021 first half,” Suva wrote a in research note previewing the outlook for the computer hardware sector.

He sees near-term PC strength for Dell, with a pick-up in enterprise demand in the second half. He expects the “added bonus” of a VMware (VMW) spinoff, accompanied by a special cash dividend to Dell from VMware of about $10 billion, which the company would likely use to pay down debt, Barron's said.

Dell has previously said it is considering spinning off its VMware stake.

Suva raised his target price on Dell to $90 from $82. Dell shares (DEL) were recently at $73.71.

Meanwhile, Dell recently forecast current-quarter sales above market expectations as a pandemic-driven shift to remote work and learning powered demand for its desktops and notebooks, helping it post a surprise rise in third-quarter revenue.

The company said, on an earnings call with analysts late last month, that it expects fourth-quarter revenue to rise 3% to 4% sequentially, implying a range between $24.18 billion and $24.42 billion, compared with analysts' average expectation of $23.09 billion.

Consumers and businesses are spending on notebooks at a rate Dell has not seen in over a decade, according to an earnings presentation, helping its client solutions group rake in a record $12.29 billion in revenue, up about 8% from a year earlier, Reuters explained.

Global shipments in the traditional PC market, which includes desktops, notebooks, and workstations, jumped 14.6% year-over-year to 81.3 million units in the third quarter of 2020, according to data from IDC.

While the health crisis lifted demand for Dell's remote workstation products, the company's data center business remained under pressure, with revenue from the unit falling about 4% to $8.02 billion in the quarter.

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