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Bernstein Sees VMware (VMW) Multiple Contraction If Slowdown in Virtualization Market Continues

May 24, 2012 1:16 PM EDT Send to a Friend
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Price: $94.14 -2.28%

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    28 Buy, 14 Hold, 3 Sell

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Shares of VMware (NYSE: VMW) are getting clobbered Thursday afternoon, possibly on the heels of an earlier research note from Bernstein's Mark Moerdler. The analyst warned he is expecting a meaningful deceleration in the penetration rate of server virtualization over the next few years, consequently creating a scenario for multiple contraction in VMware shares.

Moerdler sees enterprises eventually getting anxious and looking for more inexpensive offerings from Microsoft (Nasdaq: MSFT) or Citrix (Nasdaq: CTXS). The analyst also noted the likelihood for a lag between efforts to virtualize security/management and a slowdown in this category of software.

The Bernstein analyst maintains a Market Perform rating and $116 price target on shares of VMware.

The stock last traded at $94.04, down about 7.4 percent from Wednesday's close.

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Bernstein Mark Moerdler on 2012-05-24 13:40:13
Mark as Spam | Reply to this comment

Here we go again. A lot of analyst keeps saying this company is not a good investment. I bought this stock since $40 and keeps beating all of the quarterly estimates. Most analyst don't know what Virtualization is all about and what effects to our business economy.

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