UPDATE: Credit Suisse Reiterates Outperform Rating, Lowers PT on VMware

In a report published Wednesday, Credit Suisse reiterated its Outperform rating on VMware

, but lowered its price target from $130.00 to $115.00. Credit Suisse noted, “VMware reported September quarter revenue, operating income, and EPS results above consensus estimates-driven by strength in the U.S. federal government business and strong initial interest in vCloud Suite but offset by weakness in Australia and Europe. Although deferred revenue fell below consensus, we view September quarter consensus estimates as having been overly aggressive, as deferred revenue exceeded our estimate of $2.951 billion. Management also noted that vCloud Suite will be available for nearly the entire December quarter (which is traditionally the largest quarter for ELAs and, this year, marks the beginning of an uptrend in the ELA renewal cycle). Further, ELAs as a percentage of bookings were approximately 24% (versus 22% in the year-ago quarter) as attach rates of automation solutions (including vCloud Director and vCloud Automation Center) continued to improve. As such, we remain confident in our license estimates driven by more Tier 1 and Tier 2 applications being virtualized and a growing pipeline for vCloud Suite.” VMware closed on Tuesday at $83.72.