VMware 1Q22 Earnings to Rise Nearly 4%, Revenue to Jump 7%

The California-based tech giant VMware is expected to report its fiscal first-quarter of 2022 earnings of $1.58 per share, which represents year-over-year growth of about 4% from $1.52 per share seen in the same period a year ago.

The California-based cloud computing and software company would post revenue growth of nearly 7% to $2.9 billion. In the last four quarters, on average, the company has beaten earnings estimates over 18%.

On May 12, VMware’s board of directors announced Raghu Raghuram as its new CEO effective June 1, 2021.

“We are maintaining our $202 fair value estimate for narrow-moat VMware after the company announced that current COO Raghu Raghuram will become CEO and also released strong first-quarter preliminary results,” noted Mark Cash, senior equity analyst at Morningstar.

“Our expectation was for one of VMware’s two current COOs to become CEO, and we positively view the company tapping its leadership bench, given the moving pieces in the organization. VMware has various sizable franchises pivoting their offerings, is shifting toward subscriptions amid tight integration with cloud partners and is being spun off from Dell toward the end of 2021.”

VMware shares rose over 15% so far this year.

Analyst Comments

“With overhangs around the CEO transition and Dell ownership behind us, focus shifts to durability of growth. Our channel work speaks to improving, but not yet fully recovered fundamentals. While a positive indicator, investors likely await data on Cloud traction and margin durability,” noted Keith Weiss, equity analyst at Morgan Stanley.

“Investors are likely looking for revenue, margins, and EPS in-line with pre-announced numbers and through of the Q1 outperformance into an updated FY22 guidance. Within Q1 results, however, we also think the mix of license / Subscription & SaaS revenue will be important, as investors try to understand the pace of subscription transition and implications on topline and margins going forward.”

VMware Stock Price Forecast

Fifteen analysts who offered stock ratings for VMware in the last three months forecast the average price in 12 months of $170.08 with a high forecast of $180.00 and a low forecast of $150.00.

The average price target represents a 5.39% increase from the last price of $161.38. Of those 15 analysts, seven rated “Buy”, eight rated “Hold” while none rated “Sell”, according to Tipranks.

Morgan Stanley gave the stock price forecast of $156 with a high of $193 under a bull scenario and $94 under the worst-case scenario. The firm gave an “Equal-weight” rating on the technology company’s stock.

Several other analysts have also updated their stock outlook. VMware had its target price upped by Piper Sandler from $158 to $180. They currently have an overweight rating on the virtualization software provider’s stock. BMO Capital Markets lowered VMware from an outperform rating to a market perform rating and cut their price target for the stock to $148 from $157.

UBS Group cut their price target to $145 from $152 and set a neutral rating on the stock. Bank of America reaffirmed a neutral rating and set a $175 price target.

Check out FX Empire’s earnings calendar