Today’s share: Salesforce – Fit the clock!

Dear Readers,

Salesforce stock continues to decline. Last week, the group was forced to lower its forecast again and thus issue a profit warning – and then investors send the newspaper south by more than 5 per cent. As I used to, we read between the lines of today’s inventory and ask ourselves the questions: What is really behind Salesforce? What are the prospects in the market? Enjoy reading Salesforce Analysis today.

Salesforce Stock: Double Overpriced?

At the end of last trading week, the Salesforce share was once again the focus of some analysts. Investment bank Goldman Sachs left the rating on the “Conviction Buy List,” but lowered its target price from $340 to $320. According to Kash Rangan expert opinion, the price weakness after low expectations was exaggerated. Therefore, the target margin confirmation for the coming year should be highlighted positively. In general, a company has many levers to achieve profitability goals.

Adjust the target price down!

The Salesforce stake has also become the focus of major Swiss bank UBS. But analyst Carl Kirsted takes a different position: after the quarterly figures, the rating was left at “neutral” and the target price was revised from $190 to $180. Background: The extent to which expectations are shortened is greater than thought.

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You have potential!

Finally, we look at the evaluation from Barclays. Here, Salesforce stock rating was left at “Overweight,” but the target price was lowered from $218 to $202. The software company reminds investors of the global economic slowdown, expert Raimo Lenschow writes in his study with the new figures for the second quarter. But thanks to the potential to increase margins from within and to define a stock buyback program, the stock should outperform.

What does the company do?

Salesforce is a B2B software manufacturer specializing in Customer Relationship Management (CRM) software. The special thing about it is that the product is sold to customers on a subscription basis. This means that once a customer has decided in favor of the system, it is difficult to walk away from it. In addition, returns are easy to calculate under “normal” market conditions. But the market is very competitive. SAP, Oracle, Microsoft, Adobe and Salesforce cover just under 40 percent of the market, with the latter covering just under 19.5 percent of the market. Overall, the market shows an average annual growth rate of 14 percent.

Logical conclusion!

Salesforce announced its first stock buyback program and seized the opportunity. The company maintains some cash reserves which are currently yielding poor returns. But due to the current state of the market, it does not make sense to invest capital in new projects, although the coffers continue to be full. If the stock price then drops 50 percent due to temporary crises, it may make sense to collect and destroy your shares at low entry prices. Effects: Profit should be distributed to fewer shares, which means valuation goes down and total profits are distributed to fewer shares. This ensures increased dividend yield. We as shareholders benefit from both effects. However, Salesforce is not paying dividends yet.

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Investors are disappointed!

Due to the strong dollar and stiff competition in the cloud business, Salesforce had to lower its revenue forecast yet again. After the stock market closed last week, the group adjusted its reported earnings. Salesforce previously forecast a range between $30.9 billion and $32 billion. But with the publication it was announced that it was still expected to reach a maximum of $31 billion in sales. Then Salesforce shares corrected by more than 5 percent.

Net profit collapse!

But how did the group perform in the last quarter? Here, Salesforce increased its revenue year-over-year by 22 percent to $7.7 billion. However, due to high costs and poor development of strategic investments, the net profit collapsed. In numbers, the group managed to net $535 million last year. That year, $68 million was booked. For the later cycle of the year, management expects significant burdens, driven by the strong dollar, reducing foreign earnings.

Salesforce average price target!

The Salesforce share is currently covered by 50 major analysts from leading companies. 44 experts are of the opinion that investors should continue to buy the stock. There are also 5 “hold” ratings placed in the market, resulting in one “sell” rating. The average target price for Salesforce shares is $229 per share. Compared to yesterday’s closing price, there is another 38.6% upside potential. The highest price target is $385 per share.

End of the day!

Salesforce’s business now has more than 150,000 customers. This solution is one of the most popular on the market. Among other things, this is due to the focus on sales. Because this is where companies want to invest. In the meantime, the company has managed to develop a competitive advantage in this field. But one has to say that the profits, as already described, are very small in comparison.

However, there is still potential for margins to increase from within. This is clearly a positive factor for long-term investors. Note: Salesforce took advantage of this moment and enforced a stock buyback program. The downtrend continues and I don’t think it will be reversed until inflation starts falling again on a sustainable basis. Nobody can predict when that will happen. In the opinion of some analysts, long-term oriented investors continue to monitor the newspaper. Nothing needs to be rushed at the moment.

Should Sales Team Investors Sell Immediately? Or is it worth getting started?

How will the sales team develop now? Is the entry worthwhile or should investors sell instead? Find out the answers to these questions and why you need to act now on your current sales team analysis.

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