Salesforce jumps 12% after the reports – here’s what the analysts think

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The cloud services company and within it as a service (SaaS) Salesforce


SALESFORCE
+11.5%




closure:0

opening:193.91

High:193.91

low:185.2

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Leaping after the good reports she published. The company beat forecasts when it reported non-GAAP adjusted earnings of $1.68 per share on revenue of $8.38 billion, above expectations for $1.35 per share on revenue of $8 billion. These results come even before the company announced layoffs of 10% of its workforce at the beginning of last January.

The forecast is also good – in the coming quarter, the company expects a profit per share of $1.61 per share on revenues of $8.17 billion, above the expectation of a profit of $1.33 per share on revenues of $8.05 billion. For the full year, the company expects an adjusted profit of $7.13 per share on revenues of $34.6 billion, better than analysts’ expectations of $5.85 per share on revenues of $34.05 billion. In fact, the company’s forecast for earnings per share is also better than analysts’ expectations for next year – where they expect $6.97 per share.

However, the company is signaling that it will forego mergers and acquisitions, which will take the pressure off CEO Marc Benioff. Salesforce stock is now trading at $187 a share, up more than 40% since the start of the year, but the stock has already been trading at record highs of $300 per share, so it is still 38% away from the peak.

What do the analysts think?
By and large, the analysts are very bullish on the stock. Out of 45 analysts who cover the stock, 41 recommend a ‘buy’. But – everyone’s average target price is $190, which means that there is a situation that after the last surge the upside is completely closed.

There are at least five activist investors who own the stock. Among them are Elliott Investment Management and Dan Loeb’s Third Point. The stock is considered popular in a wave of activist activity in the shares of the technology companies that fell during the last year (and a little before).

“Benioff & Co. with their backs against the wall have delivered a ‘monstrous’ quarterback and a guide for ages ahead that will silence the people who have enough,” wrote Daniel Ives of Woodbush. The analyst raised the target price per share to $220 (from $200) and maintains the outperform rating. In his opinion, Salesforce’s move away from mergers and acquisitions will help address a major investor concern, but that doesn’t mean it can’t spin off Slack. The question investors are asking themselves is whether the purchase of Slack in 2021 for almost $28 billion was not overpriced.

“Stronger-than-expected growth, cost-cutting that is cutting into profit margins and steady buybacks should help dispel the activist argument that Salesforce is not going far enough,” analysts at DA Davidson wrote. They also raised their price target to $180 (from $150) and maintained a ‘neutral’ rating.

RBC Capital said they believed “the quarter delivered almost everything investors could have hoped for during a time when the company is under pressure from the five largest activist investors operating in it” and raised their target price to $225 (from $165) with an Outperform rating remainder.

However, not all activist investors in the company intend to keep quiet. Thus, Elliott (Elliott), who is supposed to appoint directors in the company, said yesterday that Salesforce still needs a “sustainable leadership program and a board that proves it can provide certainty.”

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