Stock Analysis & Ideas

Salesforce (CRM) Reports Q3 Today. Analysts are Optimistic.

Story Highlights

Salesforce is set to release its fiscal third-quarter results on November 30. Market participants will be keeping an eye on how the company has managed to uphold its profitability as software spending weakens and costs rise. 

Software company Salesforce (NASDAQ:CRM) is slated to release its third-quarter fiscal 2023 results on November 30. The company has benefited immensely from the rapid digital transformation and hunger for cloud-based solutions. However, software spending has been weak for the past few weeks, which could be a major dampener. Let’s pin the positives and negatives that could have impacted Salesforce’s fiscal third-quarter results.

The company expects revenues between $7.82 billion and $7.83 billion and non-GAAP earnings between $1.20 and $1.21 per share.

Catalysts for the Q3 Results

Recently, Morgan Stanley analyst Keith Weiss opined that among its cloud peers, Salesforce looks best positioned this earnings season. Again, Cowen analyst Derrick Wood derived from his checks that demand for Salesforce’s core products appeared to have been “constructive” in Q3. Such notes from analysts give us hope that the company might have at least met Street expectations for the quarter.

Also, the acquisition of Slack, which has been a terrific revenue booster in the fiscal second quarter, is likely to have been equally profitable in the fiscal third quarter.

Concerns to Consider

To better gauge the company’s Q3 performance, it is important to take into account what else could have gone wrong. Software spending by small and medium businesses has been under pressure amid the macroeconomic uncertainty, and this might have hung heavy on Salesforce’s quarterly performance.

Additionally, the company has been heavily investing in international expansions. Combined with a high-interest rate environment and rising costs of operations, Salesforce’s profitability might have been compromised in the quarter to be reported.

Will CRM Stock Go Up?

Wall Street analysts think that CRM stock can grow 39.8% over the next 12 months to reach the average price target of $212.07. The analyst consensus is bullish on the stock, with a Strong Buy rating based on 25 Buys and seven Holds.

Parting Thoughts

Considering analysts’ conviction that Salesforce is a great candidate to post an earnings beat, one can be sure of Salesforce as a great long-term investment. The company’s solutions are among the best in the industry, and the long-term demand outlook seems solid, justifying its premium valuation. However, given the potential headwinds that may have hampered performance in the third quarter, investors may want to wait for the results before adding any positions.

Disclosure

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