Analysts Hail VMware's Strong License Driven Q2; Await Broadcom Transaction Approval

VMware, Inc VMW clocked 6% revenue growth in Q2 to $3.34 billion above the consensus. Non-GAAP EPS of $1.64 beat the Street view.
Raymond James analyst Simon Leopold maintained Market Perform on VMware following 2Q23's better-than-expected earnings report.
Given the pending acquisition by Broadcom Inc AVGO that will likely close in October 2023, the company did not host a conference call, nor did it offer a forecast, he noted.
KeyBanc analyst Thomas Blakey reiterated Sector Weight following the Q2 beat, reaffirming his view that VMware is a strategic fit for Broadcom.
The analyst updated his model for Q2, and his forecasts remain largely unchanged.
He notes VMware did not host a conference call nor provide guidance in its financial disclosures for Q2.
Mizuho analyst Gregg Moskowitz reiterated a Neutral and $138 price target.
VMW reported partial Q2 results that were better than expected.
Total revenue growth of 6% Y/Y exceeded his and Street forecasts by 1 point.
Moreover, total billings were surprisingly strong, growing 13% Y/Y, easily beating his +4% estimate and the Street's +5% forecast.
He has for several years expressed much caution on VMW given his concerns about its on-premise exposure, growth profile, and ability to execute consistently.
Nevertheless, he believes AVGO is opportunistically acquiring a depressed asset at a very reasonable valuation.
Price Action: VMW shares traded lower by 1.40% at $120.00 on the last check Friday.

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