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The Dip In VMware Stock Price Is A Buying Opportunity

VMware (NYSE: VMW) stock price lost significant value in the past few months. The shares plunged close to 20% from 52-weeks high of $200 a share. The selloff in share price is only due to traders’ concerns over the trade war and macroeconomic headwinds.

VMware stock price is currently trading around $160, up significantly from 52 weeks low of $110 a share. Fortunately, the majority of analysts believe the dip in VMware shares is presenting a buying opportunity.

VMW VMware, Inc. daily Stock Chart

The Dip in VMware Stock Price Is Presenting a Buying Opportunity

The market analysts are showing confidence in the future fundamentals of this tech company. For instance, Wells Fargo has upgraded the VMware stock price target to $180 with outperform ratings. The firm is optimistic about recent acquisitions of Bitnami, Heptio, and Pivotal Software and the release of VMware Tanzu.

Goldman, on the other hand, has expressed confidence in the long-term product roadmap. Meanwhile, Oppenheimer believes VMware shares are significantly undervalued considering a multi-year growth plan. The firm has set a price target of $200 with an Outperform rating.

Financial Numbers are Supporting Uptrend

The company has generated robust financial and operational results in the latest quarter. Its second-quarter revenue increased by 12% year-over-year. In addition, the company plans to make multiple acquisitions in the coming days. These acquisitions include Pivotal Software (PVTL) and Carbon Black.

The Dip In VMware...

Acquisitions address two critical technology priorities of all businesses today — building modern, enterprise-grade applications and protecting enterprise workloads and clients,” said Pat Gelsinger, chief executive officer, VMware.

The company claims that its cloud strategy along with penetration in Hybrid Cloud and SaaS markets will accelerate revenue growth in the coming days.

The Dip In VMware...

On top, it appears in a strong cash position to support investments in growth opportunities. The company generated operating cash flow of $699 million in the second quarter. Free cash flow stood around $611 million. It does not offer any dividends to investors. Therefore, the company can use free cash flows for investment purposes. Overall, future fundamentals are supporting VMware stock price upside momentum.

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Based in Saudi Arabia, Siraj has a strong understanding of and passion for accounting and finance. He has worked for international clients for many years on several projects related to the stock market, equity research and other business, accounting and finance related projects. Siraj is a published financial analyst on the world's leading websites including SeekingAlpha, TheStreet, MSN, and others.