EMC (EMC): Still Underestimated Despite All the Potential - Barron's
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EMC (NYSE: EMC) shares are trading higher just after the opening bell Friday following a positive mention in Barron's late Thursday. The articled highlighted potential upside for EMC as it continues to invest in cloud computing.
With an 80 percent stake in VMWare (NYSE: VMW), EMC is slated to generate annual top-line growth of 15 percent over the next five years, according to Barron's. But virtulization can only take a company so far, and investors realize this. Shares of EMC have fallen 10 percent over the last year, mainly on concerns about demand softness in Europe. Comparably, the Nasdaq is up about 1.5 percent over the last year.
Much of the lag has been due to investors keeping tabs on EMC ahead of new product offerings. In Las Vegas last week, many of those concerns were put to rest as EMC took the cover off of 42 new products. One Credit Suisse analyst said at least three of the new product offerings will be significant, including an update to the popular Vmax high-end storage portfolio.
Aside from lucrative high-end products in data storage and analysis, EMC has a nice lineup in the low- and mid-range category, areas which Barron's noted are seeing strong growth.
Even better, EMC is nearly recession-proof, with companies resisting the temptation to cut back on spending as EMC products help to save money and better serve customers. EMC also has about $10 billion of cash on the books to help it withstand macro turbulence.
Although shares are down and the industry is competitive, the very-underestimated position in VMWare, as well as new product offerings, should be able to drive EMC towards analyst estimates, and hopefully far beyond.
Shares of EMC are up about 1.2 percent at last check.
With an 80 percent stake in VMWare (NYSE: VMW), EMC is slated to generate annual top-line growth of 15 percent over the next five years, according to Barron's. But virtulization can only take a company so far, and investors realize this. Shares of EMC have fallen 10 percent over the last year, mainly on concerns about demand softness in Europe. Comparably, the Nasdaq is up about 1.5 percent over the last year.
Much of the lag has been due to investors keeping tabs on EMC ahead of new product offerings. In Las Vegas last week, many of those concerns were put to rest as EMC took the cover off of 42 new products. One Credit Suisse analyst said at least three of the new product offerings will be significant, including an update to the popular Vmax high-end storage portfolio.
Aside from lucrative high-end products in data storage and analysis, EMC has a nice lineup in the low- and mid-range category, areas which Barron's noted are seeing strong growth.
Even better, EMC is nearly recession-proof, with companies resisting the temptation to cut back on spending as EMC products help to save money and better serve customers. EMC also has about $10 billion of cash on the books to help it withstand macro turbulence.
Although shares are down and the industry is competitive, the very-underestimated position in VMWare, as well as new product offerings, should be able to drive EMC towards analyst estimates, and hopefully far beyond.
Shares of EMC are up about 1.2 percent at last check.
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