(C) Reuters. Should You Buy the Dip in Salesforce.com?
The shares of cloud-based enterprise software provider Salesforce (CRM) experienced their steepest price decline since the onset of the pandemic after the company posted disappointing earnings guidance for its fiscal fourth quarter, which overshadowed its better-than-expected third-quarter results. The stock now looks overvalued at its current price level. Furthermore, because the COVID-19 omicron variant is roiling the stock market, is it be wise to buy the dip in CRM? Read on. Let’s discuss.A significant player in the software-as-a-service market Salesforce.com, Inc. (NYSE:CRM) develops enterprise cloud computing solutions with a focus on customer relationship management worldwide. The company closed its acquisition of Slack Technologies (NYSE:WORK), Inc. (“Slack”) in July 2021 for more than $27 billion, and its most recent quarter marked the first-time inclusion of a full quarter of financials from Slack. “Slack saw another strong quarter, and we are pleased with Slack’s representation in our largest deals. In this new world, Slack and our Customer 360 have never been more relevant,” boasted Amy Weaver, CRM’s President, and CFO.
However, CRM shares have tumbled in price despite the company’s solid third-quarter earnings release on November 30 because investors focused on CRM’s fourth-quarter guidance, which fell short of Street’s expectations. For the fourth quarter, the company expects its non-GAAP earnings per share to be $0.72 – $0.73, which is below the analysts’ call for earnings of $0.81. The stock plunged 12% in price on December 1, marking its steepest decline since March 2020 at the onset of the pandemic. Mizuho analyst Gregg Moskowitz lowered his price target on CRM, citing the more than expected decline in fourth-quarter guidance, which disappointed investors. He added that the shares “will likely be sluggish near-term.”
CRM shares have slumped 9.1% in price over the past five days to close its last trading session at $258.32. The stock is currently trading above its 200-day moving average but below its 50-day moving average.
Should You Buy the Dip in Salesforce.com?
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