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Will This Upgrade Help VMWare (VMW) Stock Today?

Stocks in this article: VMW

NEW YORK (TheStreet) -- VMWare (VMW) stock has been upgraded to "overweight" from "neutral" with an $111 price target, Piper Jaffray said Thursday. The firm said the company should see bookings rebound in the near term. 

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Separately, TheStreet Ratings team rates VMWARE INC as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:

"We rate VMWARE INC (VMW) a BUY. This is driven by a few notable strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, solid stock price performance, impressive record of earnings per share growth and good cash flow from operations. Although no company is perfect, currently we do not see any significant weaknesses which are likely to detract from the generally positive outlook."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • VMW's revenue growth has slightly outpaced the industry average of 6.7%. Since the same quarter one year prior, revenues rose by 14.1%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • VMW's debt-to-equity ratio is very low at 0.21 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, VMW has a quick ratio of 2.27, which demonstrates the ability of the company to cover short-term liquidity needs.
  • Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 31.03% over the past year, a rise that has exceeded that of the S&P 500 Index. Turning to the future, naturally, any stock can fall in a major bear market. However, in almost any other environment, the stock should continue to move higher despite the fact that it has already enjoyed nice gains in the past year.
  • VMWARE INC has improved earnings per share by 15.0% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, VMWARE INC increased its bottom line by earning $2.34 versus $1.71 in the prior year. This year, the market expects an improvement in earnings ($3.52 versus $2.34).
  • Net operating cash flow has increased to $750.00 million or 10.87% when compared to the same quarter last year. In addition, VMWARE INC has also modestly surpassed the industry average cash flow growth rate of 9.58%.
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