Barron’s: Why a VMware Stake Spinoff Could Mean Further Gains for Dell Stock

"We do think there is a tremendous amount of value within core DELL (ex-VMW) that isn't factored into the current stock price appropriately," Evercore ISI analyst Amit Daryanani wrote following the report.

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It is also possible that Dell could try to buy out the public shareholders of VMware, but Dell weighed that move in 2018 and the idea didn't play well with VMware stakeholders who wanted the company to remain independent.

Dell Technologies

shares jumped in trading Wednesday after The Wall Street Journalreported that the company was considering a spinoff of its valuable stake in VMware.

If Dell goes ahead with a move, its stock (ticker: DELL) could have additional upside.

Willens says it is possible that Dell could act sooner if it packaged the VMware transaction with another business.

Willens wrote that it is doubtful that Dell would sell the VMware for cash because it would trigger a significant tax bill given the low cost basis of the stake.

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