Analysts Hail VMware's Strong License Driven Q2; Await Broadcom Transaction Approval

Analysts Hail VMware's Strong License Driven Q2; Await Broadcom Transaction Approval
  • VMware, Inc VMW clocked 6% revenue growth in Q2 to $3.34 billion above the consensus. Non-GAAP EPS of $1.64 beat the Street view.
  • Raymond James analyst Simon Leopold maintained Market Perform on VMware following 2Q23's better-than-expected earnings report. 
  • Given the pending acquisition by Broadcom Inc AVGO that will likely close in October 2023, the company did not host a conference call, nor did it offer a forecast, he noted. 
  • KeyBanc analyst Thomas Blakey reiterated Sector Weight following the Q2 beat, reaffirming his view that VMware is a strategic fit for Broadcom. 
  • The analyst updated his model for Q2, and his forecasts remain largely unchanged.
  • He notes VMware did not host a conference call nor provide guidance in its financial disclosures for Q2.
  • Mizuho analyst Gregg Moskowitz reiterated a Neutral and $138 price target.
  • VMW reported partial Q2 results that were better than expected. 
  • Total revenue growth of 6% Y/Y exceeded his and Street forecasts by 1 point. 
  • Moreover, total billings were surprisingly strong, growing 13% Y/Y, easily beating his +4% estimate and the Street's +5% forecast. 
  • He has for several years expressed much caution on VMW given his concerns about its on-premise exposure, growth profile, and ability to execute consistently. 
  • Nevertheless, he believes AVGO is opportunistically acquiring a depressed asset at a very reasonable valuation. 
  • Price Action: VMW shares traded lower by 1.40% at $120.00 on the last check Friday.

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