Shares of Salesforce Inc (NYSE: CRM) are trading down after the bell even though the cloud company reported better-than-expected results for its third financial quarter in the face of a rather difficult economic backdrop.
The stock is responding to guidance that didn’t quite meet the expectations.
Salesforce is calling for $7.93 billion to $8.03 billion in Q4 revenue – the midpoint of which is below $8.02 billion that experts had forecast. It did, however, lifted its full-year earnings outlook to $4.92 a share to $4.94 a share.
Part of the sell-off may be related to the news that Bret Taylor – the co-Chief Executive of Salesforce will exit the role on January 31st. Marc Benioff will remain the sole CEO and Chairman of the company.
But the weakness might just be an opportunity to buy Salesforce stock at a discount, as far as John Freeman – Senior Equity Analyst at CFRA is concerned. He has a $284 price target on “CRM”, which represents a massive 90% upside from here.
The guidance on revenue was light. But this company has such good fundamentals, solid recurring revenue. It has a track record as a great long-term investment and it has really good economics.
Freeman doesn’t see Taylor stepping down as a meaningful negative either. Explaining what could unlock that much of an upside in Salesforce stock, he said on Yahoo Finance Live:
Earnings beat today was pretty solid and it’ll continue going forward and that’ll help. But what it really needs is a macro catalyst. Something like, for example, Ukraine coming through with a victory.
According to Salesforce, its subscription and support sales were up 13% this quarter while professional services went up 25%.
Last month, activist Starboard Value took a stake in Salesforce as Invezz reported here. Versus the start of 2022, Salesforce stock is now down more than 40%.
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