Shares of the Palo Alto, Calif., company were down 9% to $144.49.
VMware reported lower-than-expected cloud revenue but overall fiscal second-quarter earnings and revenue that were in line with estimates.
BMO Capital Markets analyst Keith Bachman kept his market perform rating on the shares, but lowered his price target to $172 from $175.
"VMW reported some modest upside to revenues, and solid results for operating profits and FCF," Bachman said in a research note. "However, the mix of revenues, with more license and less subscription and SaaS (Software as a Service) was disappointing."
Moreover, Bachman added, "management is guiding total FY22 revenues consistent with last quarter (no raise), though with greater impact from license and services and less from subscription and SaaS, despite a focus on this area."
Jefferies analyst Brent Thill kept his hold rating and $160 price target on the stock, but said "we believe the lack of visibility into long-term mix trends puts pressure on VMW's valuation."
Thill said "the stock is cheap," but added that "in the absence of fundamental catalysts, we remain on the sidelines."
Oppenheimer analyst Ittai Kidron, who maintained his outperform rating on VMware, said that "overall, progress may seem uneven at times, but we believe VMware is heading in the right direction."
"We're positive on VMware's technology and execution, and we believe it is now well positioned to be a leader in enabling hybrid-cloud deployments now that it has launched Tanzu and integrated Pivotal and Carbon Black," said the analyst, who has a $175 price target on the shares.
Stifel analyst Brad Reback raised his price target on VMware to $185 from $175, while keeping a buy rating, according to the Fly.
While second-quarter results beat the consensus estimate across all major financial metrics, Reback said that SaaS and Sub revenue growth slowed during the quarter.
Reback said he continued to believe that VMware has a defensible position in an increasingly hybrid/multi-cloud world given its strategy around cloud-native apps, multi-cloud, networking, security and EUC, but he believes the SaaS mix must grow to garner multiple expansion.
In May, VMware appointed Rangarajan (Raghu) Raghuram, an 18-year veteran at VMWare, as its new CEO.