Salesforce ‘Faces Another Tough Setup’ – Jefferies
2022.08.22 18:18
Salesforce (CRM) ‘Faces Another Tough Setup’ – Jefferies
By Sam Boughedda
A Jefferies analyst lowered the firm’s price target on Salesforce (NYSE:CRM) on Monday, while a Goldman Sachs analyst said they expect the company’s earnings to be in line with consensus and guidance.
In a note to clients, the Jefferies analyst lowered the firm’s price target on CRM to $250 per share from $260, maintaining a Buy rating.
The analyst explained: “CRM faces another tough setup with our survey indicating demand softness from macro impact. Our survey was the 3rd most negative survey since we began running it in F15 (other 2 at start of pandemic). The good news is partners still expect growth to rebound in ’23. Given the tough setup heading into the Q, expectations are low. Still, CRM offers attractive risk-reward trading close to trough levels at 5x ’23E rev. vs. comps at 9.2x (45%+ disc).”
Meanwhile, the Goldman analyst said, “going into the print we estimate revenue CC growth of 23% and operating margin of 18%, largely in-line with consensus and guidance.”
“Trading on par with the NASDAQ since its strong F1Q23 results on May 31 (CRM +4% since June 1 vs NASDAQ +6%), investors are heading into the print with leveled expectations for revenue and leading indicators. When considering Slack’s cRPO contributions of 400-500bps over the last year, management’s 18% CC guide seems to have factored in significant deceleration (~4-5 points) in the organic portfolio (vs avg CC growth of 19%). Considering potential sales elongation from a tougher demand environment, the bar for 3Q cRPO will likely be set in the mid-teens, with Slack fully incorporated in this metric,” added the Goldman Sachs analyst.
