Wells Fargo Upgrades VMware, Defying Bearish Market Sentiment

Contrary to broad investor concern, VMware, Inc. (NYSE: VMW) seems well-positioned to emerge as the leader in the market for Kubernetes-based, multi-cloud platform solutions, according to Wells Fargo.

The Analyst

Wells Fargo’s Philip Winslow upgrades VMware from Neutral to Outperform, raising the price target from $140 to $180.

The Thesis

Investors have been concerned about the demand for VMware’s virtualization-centric product portfolio being negatively impacted by rising interest in deploying containerized applications into Kubernetes-centric environments, Winslow said in the upgrade note.

He added, however, that the recent acquisitions of Bitnami, Heptio and Pivotal Software Inc (NYSE: PVTL) as well as the VMware Tanzu release will position the company to become a leader in the Kubernetes-based, multi-cloud infrastructure market.

There are several complexities of deploying Kubernetes, especially when managing resources across multiple clouds and in-house datacenters.

VMware is now focusing on “creating a bridge for traditional enterprise datacenters, cloud-native platforms, and public cloud environments to coexist and integrate,” Winslow wrote.

The analyst mentioned the company could leverage its reach of 70 million workloads across 300,000+ customers on its vSphere platform.

This could evolve into a native Kubernetes platform for virtual machines and containers and, combined with the introduction of Tanzu Mission Control, could “solidify VMware’s position as “the” abstraction company for the hybrid-/multi-cloud infrastructure stack,” Winslow said.

Price Action

Shares of VMware were up 2.09% to $153.20 at time of publishing on Tuesday.

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