Salesforce Shares Are Sliding As The Stock Slips Into 'Growth Purgatory': What's Going On?

Salesforce Inc CRM shares are trading lower Wednesday morning following a downgrade from Bernstein.

What Happened: Bernstein analyst Mark Moerdler downgraded Salesforce from Market Perform to Underperform and lowered the price target from $134 to $119, citing a growth slowdown that's already underway.

The Bernstein analyst noted that Salesforce began focusing on margins last year when growth began to slow. 

"But pressure has increased for larger margin improvements, while growth has continued to slow and the company has missed expectations," Berstein analysts wrote in a new note to clients.

Last week, Salesforce announced a 10% workforce reduction, which is likely to continue to pressure growth, Moerdler said. Salesforce is more expensive than peers and has a similar growth rate, lower margins and "lower quality earnings," he added.

"The core of our thesis is that growth has been decelerating for years, but the deceleration has been masked by acquisitions," the Berstein analyst said.

Margin improvement is going to take a while to appear, Berstein said, adding the stock has fallen into "growth purgatory" in the meantime. 

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CRM Price Action: Salesforce has a 52-week high of $239.28 and a 52-week low of $126.34.

The stock was down 2.77% at $143.35 at time of publication, according to Benzinga Pro.

Photo: courtesy of Salesforce.