Summit Research Maintains Bullish View on VMware (VMW) Despite 'Mixed' Q1

Summit Research analyst Srini Nandury reiterated a Buy rating and $105 price target on VMware (NYSE: VMW) following 'mixed' Q1 results.

Nandury commented, "VMWare reported mixed results beating the top and bottom lines, even though billings and deferred revenue were lighter than consensus driven by FX; the company also lowered estimates slightly again based on FX. Despite near term FX issues, we believe VMware is solidly positioned to benefit from the secular changes impacting the data center such as Cloud, Big Data, Software Defined Storage/Networking. We continue to believe server virtualization, aided by management tools, could still be growth driver for the company given that only 30-40% of CPUs have been virtualized (but 85% of workloads have been virtualized). Many mission critical applications are still being deployed on bare metal servers, and these mission critical workloads will be gradually moved to virtualized platforms, providing years of growth for the company. Therefore, we reiterate our BUY rating on the stock and maintain our $105PT based on ~23x on our C2016 EPS of $4.62."

The firm is forecasting F2Q15 revenue and EPS of $1.6bln and $0.91 versus consensus of $1.6bln and $0.92. They are also forecasting F2015 revenue of $6.7bln and EPS of $4.00, in-line with consensus. For F2016, they are forecasting revenue of $7.5bln and EPS of $4.60, versus consensus of $7.5bln and EPS of $4.57.

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 $85.40 yesterday.

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