VMware Universally Downgraded, Stock Tanks

Shares of VMware, Inc. VMW tanked more than 15 percent Wednesday morning. The company reported a Q3 earnings and revenue beat on Tuesday evening, but that didn't stop Wall Street firms from downgrading the stock: Nine firms downgraded VMware Wednesday morning.

Shares traded recently at $57.94, down 15.7 percent or $10.84 per share.

Bank of America Merrill Lynch cited weak revenue guidance, as well as "newly-formed EMC JV Cloud business Virtustream, suggesting that core VMW growth rate is 2-3% lower." BofA pointed to one of its recent notes referring to dilution from the Dell deal and weak Q3 bookings -- the JV dilution now makes this a "triple whammy" for the stock, for which BofA was "unprepared."

Sterne Agee CRT noted "unclear organic growth rates" in its downgrade. The firm sees "see too many near-term hurdles to expect the stock to trade to the higher end of historical Forward FCF multiple ranges (15-21x)."

Raft Of Downgrades

Here is a recap of the Street:

• Bank of America: From Buy to Neutral, Price Target cut form $106 to $69
• Sterne Agee CRT: From Buy to Neutral, PT cut from $88 to $75
• Pacific Crest: From Overweight to Sector Weight
• Raymond James: From outperform to Market Perform
• Nomura: From Buy to Neutral
• Susquehanna: From Positive to Neutral
• Maxim: From Buy to Hold
• Atlantic Equities: From Overweight to Neutral
• Macquarie: From Undefined to Neutral