VMware Set For Big Second Half, Barclays Says

In a report published Wednesday, Barclays analysts maintained an Overweight rating on

, with a price target of $100. The company reported healthy results with most of the metrics ahead of consensus estimates. VMware's key license bookings were, however, marginally below the street estimates mainly because of forex, a marginally lighter Q1 pipeline and a higher mix of subscription sales. VMware guided to license revenue growth of 3 to 4 percent y/y in Q2 in absolute dollar terms, and 9 to 11 percent in constant currency, while total revenue growth guidance was at 8 to 10 percent in absolute dollar terms, and 12 to 14 percent in constant currency. The company maintained its full year outlook in constant currency while sounding upbeat about sales execution and product positioning. "The outlook implies a back-end weighted year, but we believe adoption across the portfolio remains healthy, which gives us confidence that management's guidance is achievable," the analysts mentioned. VMware continued to diversify its product portfolio with over 55 percent of its license bookings coming from non-standalone vSphere. "The company's performance within EUC (+50% y/y), desktop license (+15% y/y) and AirWatch were also impressive and imply VMW is gaining share in the market," the analysts added. VMware is a leader in the server virtualization market and is expected to garner a significant share of the incremental IT spend driven by enterprise and service provider adoption of private hybrid cloud models. The analysts expect VMware's 2015 growth to be driven by bookings diversification. "We believe VMW can sustain mid-teens constant currency revenue growth and outperform on margins near term," the report said.