VMware stock dropped roughly 3%, or $4.69, to $167.98 in trading on the New York Stock Exchange. The stock ended the trading day Tuesday up 37 cents to $172.69.
In a research note to clients, Goldman Sachs analyst Heather Bellini noted 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."
She also noted that the company's partnerships with the likes of Amazon.com and Microsoft are likely to have a more muted financial impact this year, which she feels will have an impact on the company's multiple, with "material upside" to revenue and earnings estimates in 2019 and 2020.
Her price target on the stock remains unchanged, however, at $177.
VMware last week reported adjusted fourth-quarter earnings of $1.98 a share, beating estimates of $1.88 billion. Revenue in the period was $2.58 billion, up 16% from a year earlier, and higher than analysts' expectations of $2.5 billion.