Analysts Slash VMware Price Target Post Q3 Results

Analysts slashed price targets on&nb

Analysts slashed price targets on VMware Inc (NYSE:VMW) post Q3 results.

  • Piper Sandler analyst James Fish lowered the PT to $154 from $178 (28% upside) and kept an Overweight. 
  • The company’s Q3 results were overall mixed, as while VMware reported a 2% upside and strong operational results, the upside was driven by “lower-quality sources,” software-as-a-service underperformed given customer preferences, and initial fiscal 2023 margin guidance is disappointing. 
  • The analyst continues to like VMware long-term, saying its transition inflection point should occur in 2023, but he admits the shares may be more range-bound near-term as VMware is “stuck between value and growth buckets.”
  • Barclays analyst Raimo Lenschow lowered the PT to $140 from $163 (16% upside) and kept an Overweight. 
  • VMware reported solid results with license revenue driving overall upside and offsetting a slight miss from subscription and software-as-a-service again. 
  • “This narrative combined with underwhelming top-line guidance is not what investors want to see,” says the analyst.
  • Citi analyst Tyler Radke lowered the PT to $177 from $190 (47% upside) and kept a Buy. 
  • The company’s Q3 was again led by material upside in on-premise/license while subscription and software-as-a-service fell slightly below expectations. 
  • He believes the results are unlikely to improve near-term sentiment on the shares materially. 
  • However, VMware’s “current valuation appears undemanding.” 
  • Deutsche Bank analyst Brad Zelnick lowered the PT to $135 from $145 (12% upside) and kept a Hold. 
  • The company reported headline Q3 results that exceeded consensus expectations, raised fiscal 2022 guidance by less than the beat, and provided an initial fiscal 2023 view in line with revenue, albeit with a slightly lower margin.
  • BMO Capital analyst Keith Bachman lowered the PT to $135 from $172 and kept a Market Perform. 
  • The company’s revenues, margins, and free cash flow were above expectations. Still, the composition of the sales mix was different than anticipated, with upside driven by license revenue rather than SaaS revenue for the second consecutive quarter. 
  • Bachman adds that the definitive Tanzu adoption trends/metrics will be essential for VMware shares in an “increasingly cloud world.”
  • BofA analyst Brad Sills lowered the PT to $150 from $175 (25% upside) and kept a Neutral.
  • While VMware reported “healthy” Q3 results, he sees few catalysts and values the stock at “a notable discount to the large-cap software group” given the slower growth rate stemming from cloud transition headwinds.
  • Goldman Sachs maintained VMware with a Neutral and lowered the price target from $159 to $136 (13% upside).
  • Price Action: VMW shares traded higher by 3.27% at $120.29 on the last check Wednesday.
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