Analyst Downgrades: Costco, Toll Brothers, VMware

Analysts are weighing in today on bulk retailer Costco Wholesale Corporation (NASDAQ:COST), housing issue Toll Brothers Inc (NYSE:TOL), and virtualization specialist VMware, Inc. (NYSE:VMW. Here's a quick roundup of today's bearish brokerage notes on COST, TOL, and VMW.

• COST is down 0.9% at $140.09, after Janney downgraded the shares to "neutral" from "buy." The downgrade has overshadowed a price-target hike to $150 from $141 at Wolfe Research (which also reiterated its "outperform" rating) late yesterday, and comes on the heels of Costco Wholesale Corporation's recent earnings report. On the charts, COST hit a record high of $146.82 on Wednesday, but is on pace for a third straight close beneath its 10-day moving average -- which hasn't happened since the broad-market swoon in mid-October. Off the charts, most analysts are optimistic -- 13 out of 20 offer up "buy" or better ratings -- but short-term options traders are more put-heavy than usual. The equity's Schaeffer's put/call open interest ratio (SOIR) of 1.58 stands higher than 94% of all other readings from the past year.


• TOL is 1.3% lower at $31.72, extending its post-earnings retreat. Weighing on the stock are a pair of price-target cuts, as Barclays and Compass Point each trimmed their targets by $3, to $34 and $32, respectively. However, both brokerage firms maintained "neutral" or equivalent ratings. More negative analyst attention could be on the horizon for Toll Brothers Inc, which has shed more than 8.6% this week. Currently, six out of 13 analysts consider TOL a "buy" or better.


• Finally, VMW is 1% lower at $77.44 -- and touched an annual low of $76.87 out of the gate -- after Piper Jaffray resumed coverage with an "underweight" opinion and chilly $69 price target. VMware, Inc. has underperformed the broader S&P 500 Index (SPX) by 20 percentage points during the past three months, and could be vulnerable to more bearish brokerage notes. Eighteen out of 27 analysts maintain "buy" or better ratings, and the consensus 12-month price target of $102 represents a significant premium to VMW's current price. In the options pits, traders are already upping the bearish ante. On the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the stock's 10-day put/call volume ratio of 1.89 stands just 2 percentage points from an annual pessimistic peak.