Keybanc analyst Michael Turits maintains Salesforce with an Overweight price target, downgrades

Keybanc analyst Michael Turits maintained Salesforce Inc CRM with an Overweight and lowered the price target from $210 to $200. Turits trimmed FY 24 estimates ahead of 3Q earnings to reflect near-term concerns.

Turits is positive about the long-term outlook for Salesforce as front office applications leader after analyst day targets and the possibility of a push on margins from activist investor Starboard.

The analyst is cautious regarding the near-term outlook due to the slowing cloud spending, the ongoing recession concerns, and weaker conversations with a few Salesforce channels this quarter.

Contacts showed signs of headcount cuts and broad spending cuts across T&E and discretionary spending on the positive side of the positive side for margins.

Turits reiterated Workday Inc WDAY with an Overweight and reduced the price target from $207 to $195. He re-rated ahead of earnings but lowered his FY 23 and FY 24 outlook, given worsening macro, concerns about back office deprioritization, slowing cloud, and some weakness in recent channel conversations.

There are several long-term drivers in the HCM and Financial Modernization projects. The conversations with customers and channel partners at Workday Rising earlier in the quarter cited solid demand, with several catalysts causing customers to modernize.

Workday saw macro headwinds in 1Q before many other enterprise software peers, which is a benefit of the fact that it saw macro headwinds in that period.

Turits reiterated Okta, Inc. OKTA with an Overweight and $66 price target. He re-rated ahead of earnings.

The analyst has lowered his estimates and price target, along with the rest of our security coverage, due to feedback from security channel partners.

Turits had a more cautious outlook for Okta as they saw the negative impact on the sales force integration challenges with Auth 0, which flowed through to FY 24.

He saw identity as a top priority going into CY 23 with positive results from CyberArk Software Ltd CYBR and ForgeRock, Inc FORG, despite a more mixed security quarter in 3QQ, but he retained caution near term on management execution and the integration of the Auth 0 and Okta sales forces against a more mixed quarter in previous quarters.

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.