UPDATE: Nomura Upgrades VMware to Buy, Raises PT Following Encouraging Q2

In a report published Wednesday, Nomura analyst Rick Sherlund upgraded the rating on

from Neutral to Buy, and raised the price target from $90.00 to $95.00. In the report, Nomura noted, “Investors have been appropriately concerned about the mature market for VMware's primary product, vSphere, which has shown little growth in recent quarters. Going forward, growth should accelerate as it layers on a broader product line to complement vSphere. 2 key products (vCloud Suite and vSOM) which provide for management/automation of the platform are now gaining traction and beginning to make a difference and will be followed over the next 2 years by others that can expand the TAM more significantly. VMware reported an encouraging Q2 and guided up modestly for the second half, catching many investors off-sides or on the sidelines awaiting a guide down from the high bar management set for the second half. We have upgraded our rating to Buy from Neutral and increased our price target to $95 from $90 and have raised estimates for 2014. The shares trade at an aftermarket price of $79.83 which is 21.1x our calendar 2014 EPS estimate of $3.78 or 18.4x ex-net cash of about $11 per share and 13.2x EV/uFCF.” VMware closed on Tuesday at $71.28.