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

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.

---

Serious News for Serious Traders! Try StreetInsider.com Premium Free!

---

You May Also Be Interested In

• Emkay Global Starts Urban Company (URBANCO:IN) at Buy (1)
• Beike (BEKE) PT Raised to $23 at Morgan Stanley
• Walmart (WMT) PT Lowered to $130 at UBS on Investment Narrative's Competing Dynamics