Keybanc analyst Michael Turits maintained Salesforce Inc CRM with an Overweight and lowered the price target from $210 to $200. Turits reiterated estimates ahead of 3Q earnings but trimmed FY24 estimates to reflect near-term concerns.
Turits is positive on the long-term outlook for Salesforce as front office applications leader after its analyst day targets and by the probable push on margins from activist investor Starboard.
The analyst is cautious regarding the near-term outlook, given ongoing recession concerns, slowing cloud spending, and weaker conversations with a few Salesforce channels this quarter.
On the positive side for margins, contacts did indicate signs of headcount cuts and broad spending cuts across T&E and discretionary spending.
Turits reiterated Workday Inc WDAY with an Overweight and reduced the price target from $207 to $195. He re-rated ahead of earnings but modestly lowered his FY23 and FY24 outlook, given worsening macro, concerns about backoffice deprioritization, slowing cloud, and some weakness in recent channel conversations.
However, there are several near-term and long-term drivers in HCM and Financial modernization projects. The conversations with customers and channel partners earlier in the quarter at Workday Rising cited solid demand, with several catalysts causing customers to modernize.
Plus, Workday is benefiting from the fact that it saw macro headwinds in 1Q before many other enterprise software peers.
Turits reiterated Okta, Inc OKTA with an Overweight and $66 price target. He re-rated ahead of earnings.
The analyst lowered his estimates and price target, along with the rest of our security coverage, given recent feedback from security channel partners.
For Okta specifically, Turits had a more cautious outlook given the negative impact on this year's bookings, following the sales force integration challenges with Auth0, flowing through to FY24.
Against a more mixed security quarter in 3Q than prior quarters, he saw the identity as a top priority going into CY23 with positive results from peers CyberArk Software Ltd CYBR and ForgeRock, Inc FORG but retained caution near term on management execution and the integration of the Auth0 and Okta sales forces.
Long-term, the analyst maintained that Okta is the most likely independent consolidator in identity, identity remained a top priority within the security, and there is no meaningful change to the competitive environment, including Microsoft Corp MSFT.
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