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VMware Target Upped To $95 By Citi

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VMware, Inc’s (NYSE: VMW) reported robust Q3 results, with higher license billings. The company seems to be “working through the issues,” Citi’s Walter H Pritchard said in a report, while expressing optimism regarding the sustainability of higher growth.

Analyst Pritchard upgraded the rating on the company from Neutral to Buy, while raising the price target from $79 to $95.

Q3 Numbers Beat Expectations

VMware reported its total and license revenue ahead of expectations, backed by stability in its compute business and continued strong growth in emerging areas. Pritchard raised the EPS estimates for 2016, 2017 and 2018 from $4.33 to $4.37, from $4.56 to $4.63 and from $4.95 to $4.97, respectively.

The analyst noted three key takeaways from the Q3 results:

  1. Strong ELA as well as transactional revenue
  2. Stability in the compute and management business
  3. Solid NSX new customer count

“We believe these factors combined paint the picture of top-line revenue re-acceleration that is not only driven by ELA tailwinds,” Pritchard commented.

Upside

The recent announcement of VMware on Amazon.com, Inc’s (NASDAQ: AMZN) AWS boosts the former’s position as customers consider public cloud alternatives, the analyst mentioned. He added, “We believe shares are poised for multiple expansion as growth stabilizes at this accelerated level and investors appreciate VMW’s position has improved vis-à-vis public cloud.”

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Latest Ratings for VMW

DateFirmActionFromTo
Jul 2018Wells FargoMaintainsMarket PerformMarket Perform
Jun 2018Maxim GroupMaintainsHoldHold
Jun 2018Credit SuisseMaintainsOutperformOutperform

View More Analyst Ratings for VMW
View the Latest Analyst Ratings

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