CA - Salesforce: Slowing Growth And Declining Market Share Justify The Correction - Initiate Buy

2024-06-14 16:00:00 ET

Summary

• Salesforce retains its market-leading position in the CRM market, but its market share has been consistently declining as the RPO growth also decelerates.
• The slower monetization of Einstein 1 and the lowered FY2025 guidance raise growth concerns, with the recent deep correction notably justified.
• However, Salesforce's total RPO of $53.9B continues to offer great insights into its intermediate-term top/ bottom lines as more of its consumers buy into its multi-cloud offerings.
• It remains well capitalized to survive the near-term elongated sales cycle, thanks to its increasingly rich adj operating margins, FCF generation, and balance sheet.
• With Salesforce more reasonably valued and the stock well supported at $210s, we are initiating a Buy rating here.

This CRM Investment Thesis Is A Lot More Compelling After The Deep Pullback

As we enter the next super cycle of cloud computing, Big Tech, and eCommerce boom, it is unsurprising that global businesses are increasingly searching for opportunities to better connect with their existing consumers while growing adoption across new markets.

And here is where Customer Relationship Management [CRM] comes into the picture since a trustworthy and highly reachable company is more likely to generate better sales while growing loyal consumers...

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