UPDATE: Bank of America Raises PT on VMware to $128 from $108

Bank of America has published a report on VMware Inc. VMW raising the price target to $128 from $108. In the report, Bank of America wrote, "VMW raised C11 rev guide to $3.65-3.75bn (+28-31% y/y) up from 26%, in line with our preview. We think it is conservative and dials in items that could cause 2H headwinds— potential channel disruption from vSphere 5, tough comps, early ELA renewals that could have pulled demand forward, and concerns over federal govt budget given the macro. However, there could be upside as the upward revision to guidance is mainly driven by the beat in 2Q and expectations for 3Q—no upside factored in for 4Q, seasonally the strongest. For 2H, investors will be sensitive to impact to customer demand given the new vSphere 5 pricing change which reminds us of Oracle's move to Power Unit based pricing in late 1990's and to multi-core pricing in 2005. It drove some confusion among customers near term but settled in eventually given company's leading product and market position." Bank of America rated VMware Inc. a BUY with a price target of $128.00. VMware closed Tuesday at $106.02.