Salesforce The stock surged 12% on Thursday, heading for its biggest one-day rally since August 2020. This comes after his cloud software vendor released earnings and guidance that beat analyst estimates.
The results show the company, led by co-founder Marc Benioff, is building stakes in the business and making concessions to activist investors who recently expressed concerns about the company’s earnings and earnings performance. .
After the regulatory close on Wednesday, Salesforce reported fourth-quarter adjusted earnings of $1.68 per share. This is 23% above the consensus among analysts surveyed by Refinitiv. Earnings projections for fiscal 2024 exceeded expectations by 22%. Her financial chief, Amy Weaver, said on a conference call with analysts that Salesforce expects her adjusted operating margin to be 27% in fiscal 2024.
Alongside the earnings report, Salesforce said it was working with Bain on a business review and announced the elimination of its board committee on mergers and acquisitions. This prompted praise from prominent activist Elliott Management, which announced an investment in the company in January.
Activists have put pressure on Benioff to increase margins as revenue growth slows and the company sees dilution from expensive acquisitions like Tableau and Slack.
“We believe these steps are consistent with our recommendations and will help restore the value of Salesforce,” said Elliott’s Jesse Cohn and Jason Genrich. statement.
According to Refinitiv, Salesforce also outperformed revenue in the fourth quarter, up 14% year-over-year to $8.38 billion, beating the average analyst estimate of $7.99 billion.
“What a great fiscal year end,” said Goldman Sachs analyst Kash Langan on Wednesday’s earnings call, before asking questions. “Congratulations to the team. Much, much, much better than expected. Brighter days await.”
Langan, who recommends buying shares, raised his 12-month price target for the second time in a week after the report. More than 20 of her other analysts have also raised their targets. His new average price target is $213.02, about 15% higher than Thursday’s stock.
Evercore’s Kirk Materne, one of the analysts who raised the bar, wrote: Materne has a buy rating on the stock.
Needham analysts, led by Scott Berg, upgraded the stock to buy from hold.
“Six years on the sidelines is a long time in our universe, but we are upgrading our CRM to buy as we believe our FY24 profitability guidance will better align our cost structure with our medium-term growth outlook. ‘, they wrote.
After a 48% plunge last year, Salesforce is trading at its highest level since August, rising 41% in 2023 as the cloud software sector falls.
clock: Salesforce earnings highlight how forecasts move markets, said Kari Firestone.