RESEARCH ALERT-UPDATE 1-BofA-Merrill Lynch raises Dell to buy

Feb 10 (Reuters) - BofA-Merrill Lynch raised Dell Inc (DELL.O: Cotización) to "buy" from "neutral", saying the third-largest personal computer maker was likely to benefit from a possible enterprise refresh.

The brokerage said enterprise spending, which contributes about 50 percent to Dell's revenue, should increase with companies upgrading their computer hardware in 2010 and 2011.

"We believe low investor sentiment, compressed valuation, possible enterprise refresh, and likely positive EPS revisions, position the shares to outperform in 2010," the brokerage said in a note to clients.

The brokerage, which has a price target of $18 on Dell stock, said the recent acquisition of Perot Systems would help the company's gross margins, an indicator of profitability.

Shares of the Round Rock, Texas-based company were up 3 percent at $13.95 in premarket trade. They closed at $13.55 Tuesday on Nasdaq. (Reporting by Jochelle Mendonca in Bangalore; Editing by Anil D'Silva)