NEW YORK (TheStreet) -- Shares of VMware (VMW) - Get Report are up 0.32% to $85.46 in early morning trading Tuesday after Piper Jaffray upgraded its rating to "neutral" from "underweight," while maintaining a $74 price target. 

VMware pioneered the development and application of virtualization technologies and is a leader in virtualization infrastructure solutions. 

"The downside risk to estimates has subsided in our view, due to lowered guidance that is in line with market growth rates, the prospect of a significant new contract as a buffer against downside risk, and more reasonable valuation," Piper Jaffray analysts said. 

Analysts have expectations of low single digits growth from newer products, such as networking, storage and management, the firm noted. 

"The $1.6 billion, five year in-progress contract with the Department of Defense is likely to bring significant new license revenue and a referenceable platform customer," analysts said, adding that when the deal is made public, it's more likely that there will be some upward revisions to estimates. 

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

"We rate VMWARE INC (VMW) a HOLD. The primary factors that have impacted our rating are mixed some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. 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 and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including disappointing return on equity, weak operating cash flow and a generally disappointing performance in the stock itself."

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

• VMW's revenue growth has slightly outpaced the industry average of 10.4%. Since the same quarter one year prior, revenues rose by 14.8%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
• VMW's debt-to-equity ratio is very low at 0.20 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 2.16, which demonstrates the ability of the company to cover short-term liquidity needs.
• The gross profit margin for VMWARE INC is currently very high, coming in at 90.31%. Regardless of VMW's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 19.15% trails the industry average.
• Net operating cash flow has decreased to $415.00 million or 39.59% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
• The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. When compared to other companies in the Software industry and the overall market, VMWARE INC's return on equity is below that of both the industry average and the S&P 500.
• You can view the full analysis from the report here: VMW Ratings Report