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FBR: EMC And VMware Both May Benefit From Spinoff

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FBR Capital analyst Daniel Ives reiterated his Outperform rating and raised the price target for EMC (NYSE: EMC) from $33.00 to $35.00 and said the share repurchase plan leaves investors with something to "hang their hat on" in the near term.

FBR further notes that "A potential spin-off of VMware from EMC will face difficulties in the board room and would be an elongated process, in our opinion, we believe it could enhance shareholder value for both companies and would make VMware a top acquisition candidate by a larger technology player."

Potential plans to increase shareholder value might Include:

  • VMware spin-off
  • Increased dividend/more share repurchases
  • Reducing EMC's 80% ownership stake In VMW to a lower threshold

Overall, Ives stated, "We believe value enhancement remains the focus as EMC goes through a transition to providing its federated solutions for next-generation datacenters, and on a sum-of-the-parts valuation basis, we estimate that the base-case and best-case scenarios for EMC's fair value are $37 per share and $40 per share, respectively."

Latest Ratings for EMC

DateFirmActionFromTo
Dec 2014JP MorganInitiates Coverage onNeutral
Nov 2014Maxim GroupInitiates Coverage onHold
Oct 2014CitigroupMaintainsNeutral

View More Analyst Ratings for EMC
View the Latest Analyst Ratings

Posted-In: Daniel Ives FBR CapitalAnalyst Color News Reiteration Analyst Ratings

 

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