5 Salesforce Analysts Offer Their Takes On Q3 Print, Taylor's Departure As Co-CEO

Salesforce Inc CRM recently reported its third-quarter results and that Bret Taylor will step down as co-CEO.

Here's how analysts reacted.

Raymond James analyst Brian Peterson reiterated a Strong Buy rating; reduced the price target from $225 to $200.
Needham analyst Scott Berg maintained a Hold rating on the stock.
Mizuho Securities analyst Gregg Moskowitz reiterated a Buy rating; reduced the price target from $225 to $200.
JMP Securities analyst Patrick Walravens maintained a Market Outperform rating, with an unchanged price target of $250.
Wells Fargo analyst Michael Turrin reaffirmed an Overweight rating; reduced the price target to $175.

Raymond James

Salesforce’s fiscal third-quarter print showed “solid progress on margin expansion initiatives, although growth metrics again decelerated given FX/macro headwinds,” Peterson said.
“While we believe CRM is taking steps to ensure its margin/FCF goals in a choppy macro, the departure of co-CEO Bret Taylor (following other key executives leaving) creates a new ripple in the narrative, which pushed shares down ~7% after hours,” the analyst added.

Needham

While saying that Salesforce’s quarterly sales were “largely in-line,” Berg mentioned in a note that the stepping down of Taylor represents “a significant blow given his leadership role on product.”
“On the positive side, the operating margin in the quarter was much stronger than expected, likely leading some to believe CRM is ahead of its cost reduction target,” the analyst added.

Mizuho Securities

“CRM reported a very mixed F3Q, with constant currency CRPO growth of 15% in line with guidance that was widely viewed as conservative,” Moskowitz wrote. While margins were strong, cash flow was underwhelming, he added.
“And due to broader macro challenges, the F4Q guidance was worse than expected,” the analyst stated.

JMP Securities

With $30 billion in revenue, Taylor's departing, a difficult macroeconomic environment, and an activist "looming in the wings," Salesforce “has to have a beginner's mind,” Walravens said, quoting the company's co-CEO and founder Marc Benioff.
It is time to consider things like a significant headcount reduction, requiring more roles to be back in the office, eliminating or spinning off businesses that are not working, driving higher margins, and, most importantly in our view, judiciously applying the company’s constrained resources to its best opportunities,” Walravens said.

Wells Fargo

“While the FQ4 revenue and implied OM guide was in line with prior targets, cRPO came in below Street ests and management declined to provide prelim FY24 guidance,” Turrin wrote.
“With co-CEO Bret Taylor concurrently stepping down, we expect there will be lingering investor questions across initial FY24 rev and margin outlooks, macro impacts, and LT targets/durable growth,” he added.

CRM Price Action: Shares of Salesforce had declined by 9.58% to $144.90 at the time of publication Thursday.