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What Caused VMware Stock to Rise More Than 75% in the Last Year?

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Factors that boosted VMware’s stock

Earlier in the series, we discussed analysts’ expectations for VMware’s (VMW) soon-to-be-announced fiscal 1Q17 results. We also discussed its recent buyout of Wavefront and the sale of its vCloud Air to France-based OVH.

VMware’s strategic partnerships with Amazon (AMZN) and IBM (IBM) in the cloud space have contributed significantly to the market’s improved sentiment toward its stock.

The above chart, taken from RightScale’s 2017 State of the Cloud Report, shows that VMware’s vSphere is the preferred private cloud software among both enterprises and small and medium businesses (or SMB).

VMware’s increased initiatives and strategic partnerships have enabled its stock price to recover after hitting a low in 2016. It’s surged more than 77% in the past year.

Another important factor that contributed to VMware’s stock surge was the removal of the uncertainty that had been plaguing it since Dell announced its purchase of EMC. EMC has an 80.0% stake and 97.0% voting rights in VMware.

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VMware’s improved price targets

Earlier this year, according to 247wallst.com, VMware was chosen as one of RBC’s top large-cap software picks for 2017. The company’s better-than-expected fiscal 4Q16 results and increased initiatives in the cloud space also caused Drexel Hamilton analyst Brian White to reiterate a “buy” rating on the stock, raising its price target to $105 from $90.

Similarly, John DiFucci, an analyst at Jefferies, reiterated a “buy” rating on VMware stock, raising its price target to $105 from $91.

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