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VMWare Issues Upbeat Q1 Earnings Forecast, Picks New CEO

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VMWare (VMW) plans to release its first-quarter fiscal 2022 earnings results on May 27. In the meantime, it has provided a peek into what investors can expect from the results, and has also announced a new chief executive pick. The stock fell 2.86% on Wednesday to close at $156.48.

The business software company expects to report revenue of $2.99 billion, which would mark an increase of 9.5% year-over-year. That would also beat Wall Street's expectations of $2.91 billion. The company estimates its subscription, SaaS, and licensing sales grew 12.5% to $1.39 billion.

VMWare expects to report adjusted EPS of $1.76, which would be higher than EPS of $1.51 that analysts anticipate on average. (See VMWare stock analysis on TipRanks)

Alongside the preliminary Q1 earnings release, VMWare named Raghu Raghuram as its new CEO. Raghuram will replace Pat Gelsinger, who has left the company. Raghuram is a VMWare veteran, having been with the company since 2003. He currently serves as the company’s COO of Products and Cloud services. Raghuram’s promotion to CEO will take effect on June 1.

“We have enormous opportunity, we have the right solutions, the right team, and we will continue to execute with focus, passion, and agility,” said Raghuram.

On the back of the preliminary Q1 earnings release and CEO appointment, Oppenheimer analyst Ittai Kidron reiterated a Buy rating with a price target of $175 on VMWare stock. Kidron’s price target points to 11.84% upside potential from current price levels.

“We view the announcement positively and expect a smooth transition with no change to the company’s strategy or primary mode of operation,” commented Kidron.

Consensus among analysts on Wall Street is a Moderate Buy based on 7 Buy and 8 Hold ratings. The average analyst price target of $170.08 implies 8.69% upside potential to current levels.

VMW scores a 9 out of 10 on TipRanks’ Smart Score rating system, indicating that the stock’s returns are likely to outperform the market.

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