This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
$1 buys you full access to ALL of TheStreet's Subscription Services! Learn More

VMware Soars to New High

SAN FRANCISCO -- Shares of virtualization darling VMware (VMW) broke through to a new high Monday after bullish coverage initiations from seven of the company's IPO underwriters.

The stock was recently up $5.86, or 7.4%, to $85.17.

Parent company EMC (EMC), which retains ownership of 86% of VMware, also got a boost ; its stock was recently up nearly 7% to $20.31.

Given VMWare's ever-rising price target, analysts may be feeling pressured to meet loftier views of the stock's potential.

While UBS' 12-month target looks bullish at $92, it's tame next to Citigoup's $100 target price. Bank of America valued the stock at $75 and gave it one of four neutral or hold ratings Monday. Three analysts ranked the stock a buy. VMware is an investment-banking client of all the firms.

Previous coverage by analysts whose firms did not participate in the IPO give the stock a more moderate $66 median price target, according to Thomson Financial.

In explaining her $92 target, UBS analyst Heather Bellini compared VMware to Google (GOOG) "as a sanity check," because both companies are the leaders in fast-growth markets. "We believe VMware could post similar upside to estimates as Google did in the first year after going public," she wrote. Google beat earnings estimates by about 30% on average during its first year.

Citigroup analyst Brent Thill noted his $100 price target gives credit to a strong growth rate and assumes a price-to-earnings-to-growth (PEG) ratio of 2.3 -- assuming a three-year earnings growth rate of 39% and that the stock trades at 89 times earnings. Thill gave the stock a high risk rating.

1 of 2

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 17,810.06 +91.06 0.51%
S&P 500 2,063.50 +10.75 0.52%
NASDAQ 4,712.97 +11.1030 0.24%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs