UPDATE: Jefferies Downgrades VMware (VMW) to Hold
Jefferies analyst Brent Thill downgraded VMware (NYSE: VMW) from Buy to Hold with a price target of $135.00.
The analyst comments "At current valuation, we believe risk/reward is not as favorable amid potential downside bias to ests. over the next 3-6 months: 1) we remain cautious on n-t on-premise IT spending in the current environment as cloud infrastructure dollars benefit from WFH build-outs (to which VMW has relatively lower exposure); 2) Street ests. have moved lower but need a further reset, in our view: 3) after peaking at 23.2x NTM FCF in Apr'19, the stock troughed at 11.1x in Mar'20 vs current 16.3x; risk/reward is not as favorable as it was a month ago. Over the long term, we recognize product efforts to support sustainable growth and would look to get more constructive as visibility improves."
Shares of VMware closed at $134.86 yesterday.
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