VMware (VMW) Q1 'Not as Good as it Looks' - Nomura

Nomura Securities analyst Rick Sherlund commented on VMware's (NYSE: VMW) Q1 results, saying they were 'not as good as it looks'. Still, the analyst maintained a Buy rating and price target of $120.

Sherlund commented, "VMware reported implied (or calculated) billings growth of about 18% for Q1, but if we adjust for the acquisition of AirWatch, this is about 15%. Management commented further on its conference call that there are internal adjustments that suggest the underlying growth was only in the single digits. We have a detailed analysis that sheds some greater perspective on this and while the transactional business was very strong, the new ELA activity was indeed very weak, which may be a seasonal issue that we suspect will correct in Q2. There is no definitive answer; however, so this is likely to be a damper on sentiment until Q2 is reported, playing into the anxieties of how robust the underlying growth is at VMware. FY14E EPS from $3.54 to $3.49; FY15E EPS at $4.17."

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 $105.15 yesterday.

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