Tuesday, January 15, 2008

VMware (NYSE:VMW): Reiterate Buy and $129 tgt - Jefferies

- Jefferies is out with a positive call on VMware (NYSE:VMW) saying their checks indicate a strong pipeline of new and renewal activity, with a significant number of ELAs in process. In the past mgmt has said that 70% of revenue and orders are <$50k, but firm's sense is that there's a movement to sign customers to broader agreements, so this ratio could shift, given seasonality, the looming entry of Microsoft, and what appears to be early testing of virtualization for production-level applications.

VMW shares also appear very reasonably valued, currently trading at 40x 2009 pro-forma EPS of $2.03 and at a PEG ratio of 0.6, based on 3 year revenue CAGR of 63% through 2009.

Reits Buy and $129 tgt on VMW

Notablecalls: Is this call enough to generate buy interest in VMW? I think so!

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