Pivotal Software, VMware stocks fall after Goldman downgrades

Shares of Pivotal Software Inc. are down nearly 6% in afternoon trading Wednesday, while shares of VMware Inc. are down about 2%, after Goldman Sachs analyst Heather Bellini downgraded both stocks. She cut her rating on Pivotal's stock to neutral from buy and lowered her rating on VMware's shares to sell from neutral. "While Pivotal Software could benefit from increasing adoption of containers and serverless computing, we believe that those trends are still in their early stages and increasingly more likely to benefit public cloud vendors," Bellini wrote. "While VMware could benefit from containers being run in virtual machines for security benefits, we expect that as container adoption matures, demand for VMs will face gradually increasing headwinds." She said that VMware's partnerships, including with Amazon.com Inc.'s [s; amzn] AWS, "are still in the early innings" though she estimates that much of the upside from such arrangements is already captured in the current stock price. Pivotal's stock has gained 14% over the past three months, as VMware shares have ticked up 4.1% and the S&P 500 has risen 3%.

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