Citigroup Reiterates Sell, $80 Target on VMware

Citigroup maintains its Sell rating and $80 target price on VMware

, as 2012 guidance from the company looks better than feared on maintenance flow-through. Citigroup comments, "2012 revenue guidance of +19-22% Y/Y was ahead of our 18% and inline with street 20%. Higher maintenance flow-through is the delta vs. our prior estimate while license growth of 11-16% is lower than we would have expected. We note that in 2H11, the company posted results at highend of guidance, versus explosive upside in 1H11. We believe server slowdown, tougher ELA cycle and lack of macro deterioration in guide leaves a balanced setup, versus what most investors assume is conservative. Overall, our maintenance revenue comes up, license comes down and main driver of our 2012 EPS increase is 2% lower tax rate." VMW closed at $86 a share yesterday.