VMware Inc. shares rose Wednesday after an analyst upgraded the virtual desktop service provider, saying the company is in a better position than many other software companies.
THE SPARK: In a note to investors Wednesday, RBC Capital Markets analyst Robert Breza upgraded VMware shares to "Outperform" from "Sector Perform" and raised his price target by $12 to $75.
THE BIG PICTURE: Companies are shifting toward virtualization because it helps them cut data center costs. Instead of needing one server for each task, software such as that offered by VMware lets one server computer do many more things simultaneously. Virtualization is also extending beyond servers in data centers to applications and even whole desktops.
THE ANALYSIS: Breza said VMware is "one of the best-positioned software companies" and he expects it to gain from several technology trends in the next several years, such as growth in cloud-computing applications. He also thinks its enterprise license agreement is "under-appreciated by investors" and could result in the company raising its earnings estimates this year.
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