A Big Upgrade for VMware

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VMware (NYSE: VMW  ) had struggled to improve on the three-star ranking it held for most of the past few years, but  enough top-performing CAPS members have turned bullish recently to elevate it to four stars. A total of 1,761 members have given their opinion on VMware, with many offering analysis and commentary explaining the recent optimism.

While it's not completely out of the woods amid the recession, the virtualization software maker is now able to give a little more clarity in its forecasts. Like majority owner EMC (NYSE: EMC  ) , it pulled in better-than-expected third-quarter results, helped by strong sales to the U.S. government. While giants like IBM (NYSE: IBM  ) , Intel (Nasdaq: INTC  ) , and Google (Nasdaq: GOOG  ) recently improved their outlooks, VMware expects to follow up what many saw as a yawner of a quarter with higher revenue than what Wall Street is expecting, too.

After putting them on the back burner, companies are making IT investments again, and VMware's customers have shown a strong appetite for its services. It may take some time for VMware's new vSphere software to make an impact on revenue, but CAPS members see big long-term potential in virtualization, a market that Oracle (Nasdaq: ORCL  ) and Microsoft (Nasdaq: MSFT  ) also want a piece of. And with its purchase of privately held SpringSource, VMware looks to boost its cloud-computing potential. It has consistently pulled in positive free cash flow, giving CAPS members many reasons to like the stock.

Do you think VMware deserves its improved status? Add your thoughts in the comments box below, or head over to CAPS to rate the company and check out all the information and opinions the community offers, absolutely free.