Deutsche Bank Sees Little Upside In VMware (VMW)
Deutsche Bank sees little upside in shares of VMware (NYSE: VMW), after the cloud computing company hosted its VMWorld conference and an analyst day. It rates shares at Hold, and has a $78 price target.
In a note to clients, Deutsche Bank writes, "VMware is trading at 20x times 2011 FCF. While we believe the company has significant growth opportunities in front of it we struggle to see significant upside to the stock given current valuation. Our current PT of $78 is driven by our DCF analysis which assumes a 5% terminal growth rate and WACC of 18%. Downside risks to our PT include slower-than-expected virtualization adoption. Upside risk: enterprise adoption of desktop virtualization takes off & server virtualization adoption growth accelerates."
Shares of VMware closed at $78.46 yesterday, good for a gain of 6 cents.
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