VMware cut by Monness, Crespi, Hardt as Broadcom deal in 'home stretch'
Sundry Photography/iStock Editorial via Getty Images
VMware (NYSE:VMW) was downgraded by investment firm Monness, Crespi, Hardt on Monday as the deal to be acquired by Broadcom (NASDAQ:AVGO) looks to be in the "home stretch."
Analyst Brian White moved his rating on VMware (VMW) shares to neutral from buy, noting that the deal received final approval from the U.K.'s antitrust regulator and the U.S. has not challenged the deal, paving the path for the deal to close.
Broadcom (AVGO), which is paying roughly $61B in cash and stock for VMware (plus the assumption of $8B in debt) expects the deal to close on October 30, 2023.
VMware (VMW) is slated to report second-quarter results on August 31 and White is expecting sales of at least $3.416B and earnings of $1.64 per share, indicating some slowing growth. 
"Our model reflects a 4% [quarter-over-quarter sales increase in second-quarter of fiscal 2024], weaker than the 8% rise reported in [second-quarter of fiscal 2023]," White wrote in an investor note. "On a YoY basis, we are modeling sales growth to decelerate to 2% in 2Q:FY24 from 6% in 1Q:FY24, and below the 6% increase reported a year ago in 2Q:FY23."
Delving deeper, White is looking for license revenue of $625.6M in license revenue, down 21% year-over-year, while subscription and software-as-a-service revenue is expected to jump 34% to $1.266B. Services revenue is expected to slide 5% to $1.524B.
A consensus of analysts VMware, Inc. (VMW) Earnings Estimates that VMware (VMW) will earn $1.72 per share on $3.46B in revenue.
Analysts are largely in agreement on VMware (VMW). It has a HOLD rating from Seeking Alpha authors, while Wall Street analysts rate it a BUY. Conversely, Seeking Alpha's quant system, which consistently beats the market, rates VMW a HOLD. 

More on Broadcom, VMware, etc.

Broadcom: AI Alone May Not Be Able To Help With Balance Sheet Challenges
Broadcom: Profitability At Scale
Broadcom: The Gift That Keeps On Giving (And Giving And Giving)
Broadcom: Short-Term Pain, Long-Term Gem
VMware teams with Nvidia to allow companies to build private generative AI tools
Broadcom's $61B planned VMware purchase clears U.S., UK