Salesforce, Inc. (NYSE:CRM) shares are tumbling on Tuesday as the stock hits a fresh 52-week low following a recent wave of disappointing earnings reports from major software companies.
The decline comes particularly as peer SAP (NYSE:SAP) and ServiceNow (NYSE:NOW) set a risk-off tone across the sector last week, raising concerns about cloud demand and IT budgets, adding pressure as broader markets edged lower.
Additionally, Piper Sandler analyst Brent Bracelin on Tuesday maintained Salesforce with an Overweight rating and lowered the price target from $315 to $280.
Salesforce Slides As SAP, ServiceNow Results Weigh On Enterprise Software
Salesforce’s stock is down more than 7% Tuesday afternoon, reflecting investor anxiety after SAP’s mixed results and ServiceNow’s slower growth outlook have further dampened sentiment in recent sessions. Investors are likely focused on how these results could impact corporate IT spending and the demand for Salesforce’s cloud solutions.
In addition, SAP’s CFO recently highlighted a sharper-than-expected slowdown in cloud backlog growth, attributing it to a shift towards larger transformation projects with longer ramp periods. This dynamic raises concerns about near-term revenue visibility across enterprise software, which is crucial for Salesforce as it navigates a competitive landscape.
The broader market is experiencing a downturn, with the Nasdaq-100 down 1.30% and the S&P 500 down 0.64%. Salesforce’s decline occurs alongside a broader sell-off in technology stocks, which are generally underperforming today, suggesting company-specific concerns may be exacerbated by overall market conditions.
Is Salesforce Stock Oversold Or Overreacting?
Salesforce stock is currently trading 16.7% below its 20-day simple moving average (SMA) and 19.6% below its 50-day SMA, indicating a bearish trend. Over the past 12 months, shares have decreased by approximately 42.05%, and they are positioned closer to their 52-week lows than highs.
The RSI is at 24.77, indicating that the stock is in oversold territory, while the MACD is below its signal line, reflecting bearish pressure on the stock. The combination of oversold RSI and bearish MACD suggests mixed momentum.
Salesforce’s Business Model
Salesforce provides enterprise cloud computing solutions, specializing in customer relationship management technology that connects companies with their customers. Its Customer 360 platform delivers a unified view of customer data across various systems, which is essential for businesses looking to enhance their sales, service, marketing, and commerce efforts.
As a leading player in the enterprise software market, Salesforce’s performance is closely tied to corporate IT budgets and the demand for cloud solutions. The recent earnings reports from major competitors highlight the challenges facing the sector, particularly in terms of growth expectations and revenue visibility, which could impact Salesforce’s future performance.
What Do Analysts Predict For February's Earnings?
Investors are looking ahead to the next earnings report on Feb. 25.
- EPS Estimate: $2.69 (Down from $2.78 YoY)
- Revenue Estimate: $11.18 billion (Up from $9.99 billion YoY)
- Valuation: P/E of 28.1x (Indicates premium valuation)
Analyst Consensus & Recent Actions: The stock carries a Buy Rating with an average price target of $323.79. Recent analyst moves include:
- Piper Sandler: Overweight (Lowers Target to $280.00) (Feb. 3)
- Barclays: Overweight (Raises Target to $338.00) (Jan. 12)
- RBC Capital: Sector Perform (Raises Target to $290.00) (Jan. 5)
Valuation Insight: While the stock trades at a premium P/E multiple, the strong consensus and 3% expected earnings decline suggest analysts view this growth as justification for the 65% upside to analyst targets.
CRM Shares Hit New 52-Week Low Tuesday
CRM Price Action: Salesforce shares were down 7.67% at $194.67 at the time of publication on Tuesday, according to Benzinga Pro data.
