Goldman Sachs Removes VMware (VMW) from CL List Post Results, Outlook

January 29, 2013 8:23 AM EST Send to a Friend
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Goldman Sachs removed VMware (NYSE: VMW) from its Conviction Buy List but maintained a Buy rating following Q4 results and a weak outlook after the close. The firm's price target moves to $100.00 from $130.00.

The firm notes the quarter-over-quarter decline implied by license guidance (down -18% to -20%) reflects the worst license outcome VMW has seen since the trough of the financial crisis in 1Q09.

The analyst comments: "While VMW's strong ELA performance, driven by its largest customers, is a sign that tier 1 app virtualization and management tools are having a positive impact, we think the performance on the transactional side of the business will raise questions about the appetite for SMB customers to expand their virtualization footprint in a meaningful way. We have yet to pick up on any material changes in the competitive landscape in this portion of the market. Given guidance and the delta between ELA and transactional performance in 4Q12 and what is implied for CY13, we believe more information is required to come to the conclusion that guidance is merely the result of a new management team setting a very conservative bar as we wait for the software defined datacenter opportunity to kick in."

FY13 EPS estimates go down form $2.35 to $2.01 and FY14 from $2.60 to $2.19.

For an analyst ratings summary and ratings history on VMware click here. For more ratings news on VMware click here.

Shares of VMware closed at $98.32 yesterday.


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Analyst EPS Change, Analyst EPS View, Analyst PT Change, Downgrades

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Goldman Sachs Conviction Buy List, Goldman Sachs

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