VMware (VMW) Soars 4.2%: Is Further Upside Left in the Stock?

Zacks Equity Research

13 October 2023 at 8:03 am·2-min read

VMware VMW shares ended the last trading session 4.2% higher at $178.71. The jump came on an impressive volume with a higher-than-average number of shares changing hands in the session. This compares to the stock's 3.6% gain over the past four weeks.

The upswing is attributed to its strong subscription and software-as-a-service (SaaS) revenues. The company’s widening cloud customer base is driven by ongoing cloud-based digital transformation and partnerships with Accenture, AWS, IBM, Microsoft, Google, Oracle, Alibaba, Vodafone, and Samsung.

VMware is set to be acquired by Broadcom.

This cloud computing company is expected to post quarterly earnings of $1.75 per share in its upcoming report, which represents a year-over-year change of +19.1%. Revenues are expected to be $3.44 billion, up 7% from the year-ago quarter.

Earnings and revenue growth expectations certainly give a good sense of the potential strength in a stock, but empirical research shows that trends in earnings estimate revisions are strongly correlated with near-term stock price movements.

For VMware, the consensus EPS estimate for the quarter has remained unchanged over the last 30 days. And a stock's price usually doesn't keep moving higher in the absence of any trend in earnings estimate revisions. So, make sure to keep an eye on VMW going forward to see if this recent jump can turn into more strength down the road.

The stock currently carries a Zacks Rank #1 (Strong Buy). You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>

VMware is a member of the Zacks Computer - Software industry. One other stock in the same industry, Pros Holdings (PRO), finished the last trading session 1.2% lower at $34.16. PRO has returned 6.5% over the past month.

Pros Holdings' consensus EPS estimate for the upcoming report has remained unchanged over the past month at $0.03. Compared to the company's year-ago EPS, this represents a change of +150%. Pros Holdings currently boasts a Zacks Rank of #3 (Hold).

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