Stifel reiterates a Hold rating on VMware (NYSE: VMW) ahead of the company's 1Q earnings report. VMW is scheduled to report 1Q earnings on April 19th after market closes. Stifel believes that VMW is likely hit a subdued EPS and revenue forecast of $0.83/$1,556.8M, which is at the low end of guidance. The company's guidance of $0.83-$0.85 EPS, and $1,555M-$1,600M in revenue, was well below F1Q16 street estimates of $0.92 and $1,654.2M.

Analyst Brad Reback commented, "Overall, 2016 is shaping up to be a transition year, with growth in newer initiatives expected to offset declines in the mature vSphere business and while valuation is not expensive at 7.5x CY17 EV/FCF, we remain cautious given the aforementioned challenges (not to mention additional risks upon Dell/EMC closing including the potential for reduced VMware shareholder rights, supply/demand impact from the new tracking stock, etc.) and remain on the sidelines."

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Shares of VMware closed at $51.73 yesterday.