VMware
(NYSE: VMW)

Ticker: VMW
Buy: market ($146.19)
Take profit: $185
Stop-Loss: $123
Updated Stop-Loss: $150 (28.10.19). Stop-Loss is shifted to breakeven.

VMware (NYSE: VMW) – American company, the largest softer developer for virtualization, founded in 1998 with Headquarters in Palo-Alto, CA, USA

In a Q2, VMware announced about two major acquisitions:
  • Carbon Black (Nasdaq: CBLK) – cybersecurity field of expertise. Developing could storage solutions aiming to detect unverified activity on the web. Among more than 5000 clients, there are such companies as DocuSign (Nasdaq: DOCU), Evernote, Adobe (Nasdaq: ADBE).
  • Pivotal Software (NYSE: PVTL) – the company building infrastructure for the development of scaling software products and applications. Major company’s clients are Boeing (NYSE: BA), Bloomberg, Orange (EPA: ORA), T-Mobile (Nasdaq: TMUS), Ford (NYSE: F).

We assume that such strategic acquisitions will lead to synergetic effect. After integration of the companies VMware clients will be able use a full pack solution for secure virtualization and scaling of software infrastructure. Moreover, VMware will enlarge customer base with some big names in it.

Financial indicators: Q2 2019:

  • During the second quarter VMware performed a $2.44 billion revenue, which is 12% higher comparing with same period last year.
  • Revenue from licence sales was more than $1.1 billion, 12.3% more than last year for the same timeframe.
  • Revenue from services offered was $1.43 billion, 12.1% more than last year for the same timeframe.

Financial statements illustrate revenue increase higher than the market expectations were.

Through our analysis we consider that correction, which was a result from acquisition activity, is finished now. And for the moment company’s stock price will benefit from boosted financial performance.

Technical Analysis



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Correction started in May ’19 was more than 35%, what is deep enough for the renewal of upward trend.

Correction bottomed at $129 p/share – January ’19 levels.

SMMA 100 on the weekly graph suppressed the downfall at $130 p/share

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Correction from the last movements was less than 50%, therefore there is a possibility to go back to the level of $120- $125 p/share.

SMMA 50 indicator on the weekly graph is equal to the current value of the share, which could prevent the upcoming rally.

 


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