VMware Loaded, Ready to Run

PALO ALTO, Calif. (TheStreet) -- VMware(VMW) is expected to reap the benefits of an improving economy when it reports its third-quarter results after the market closes Wednesday.

The virtualization trailblazer's shares have almost doubled in value since the start of the year, and VMware has certainly been feeling the analyst love in recent weeks.

Jefferies & Company recently upgraded VMware on the strength of improved virtualization spending, and the analyst firm also raised the software maker's price target from $30 to $40.

"We believe improvement in virtualization spending in the second half of 2009 could boost top and bottom line for VMware," wrote Jefferies analyst Katherine Egbert, in a note. "While some customers still remain cautious, formerly delayed projects are now moving along and some strategic initiatives are being reignited."

Analysts surveyed by Thomson Reuters expect VMware to report sales of $473.95 million and earnings of 20 cents a share. The company, however, has been experiencing a slowdown in its phenomenal growth of recent years. In the third quarter of 2008, for example, VMware brought in revenue of $472 million, a 32% increase on the prior year, and earned 24 cents a share.

Wedbush Morgan analyst Kaushik Roy is nonetheless bullish on VMware's prospects and predicts a boost from Intel's(INTC) Nehalem processor and Microsoft's(MSFT) soon-to-be-launched Windows 7 operating system.

"Intel's upcoming server processor [is] expected to catalyze server sales," he wrote, in a recent note. "[And the] Microsoft Windows 7 desktop software related refresh [is] seen as a driver for IT managers to deploy desktop virtualization software."