Goldman Sachs analyst Heather Bellini downgraded VMware (VMW) to Sell from Neutral with an unchanged price target of $177. The stock closed yesterday up 37c to $172.69.
The analyst this morning also downgraded Pivotal Software (PVTL) to Neutral from Buy. While VMware has done an excellent job diversifying its revenue base away from core virtualization, the benefit from the resurgence in on-premise spending is starting to face more normalized comps, Bellini tells investors in a research note.
The analyst is optimistic on the company's revenue potential from partnerships with platforms such as Amazon Web Services (AMZN), but she believes the stock's current multiple is factoring in "material upside" to revenue and earnings estimates in 2019 and 2020.
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