Falling Price Channel Continues
The weekly candlestick chart for CRM shows a continuation of its falling price channel ever since the inverse pup breakdown occurred in August 2022 through the $184.22 level. Shares fell back down through weekly 20-period exponential moving average (EMA) as the weekly 50-period MA resistance continued lower. The weekly market structure low (MSL) trigger forms on a breakout through $158.02. The weekly 20-period EMA resistance nearly overlaps with the MSL trigger at $158.91 followed by the 50-period MA at $182.30. The reaction to the Q3 earnings prompted shares to fall back below the 20-period EMA on nearly triple the volume from the prior week. If the swing low breaks at $136.04, then pullback supports sit at $130.04, $125.12, $120.15, and $115.29.
On November 30, 2022, Salesforce released its fiscal third-quarter 2023 results for October 2022. The Company reported earnings-per-share (EPS) profits of $1.40 versus a profit of $1.22 consensus analyst estimates, an $0.18 beat. Revenues grew 14.2% year-over-year (YoY) to $7.84 billion, beating analyst estimates for $7.83 billion. RPO ended Q3 at approximately $40 billion, a 10% YoY increase. Gross margin held up at 70%. Salesforce Co-CEO Mark Benioff commented, “We closed some amazing deals in the quarter with great companies like Bank of America, RBC Wealth Management and Dell and other great stories, and I'm also going to get that into a moment as well. And even with purchase decisions receiving greater scrutiny, we continue to gain market share and close marquee transactions. IDC recently ranked Salesforce as number one in CRM. And now we've done that for nine years in a row.”
Salesforce issued mixed guidance for fiscal Q4 2023 EPS of $1.35 to $1.37 versus $1.35 consensus estimates on revenues of $7.932 billion to $8.032 billion versus $8.04 billion analyst estimates. The Company expects further headwinds from the strong U.S. dollar. However, the U.S. dollar index has fallen from a high of $114.68 on Sept. 28, 2022, to a recent low of $103.70 trimming its performance to just 8.72% for the year from a high of over 16%.
Analysts Are Concerned
With Bret Taylor leaving at the end of January 2023 to pursue “entrepreneurial roots”, analysts are concerned with Marc Benioff taking the reins. His strategy in the past has been one of acquisition upon acquisition. This strategy concerns analysts like Dan Ives at Wedbush as he felt Taylor was a mainstay in the Salesforce strategy and his departure came as a shocker. He said it wouldn’t surprise him if Marc Benioff returned to his old strategy of more mergers and acquisitions in the cloud sector to combat Microsoft (NYSE: MSFT) in the cloud and business collaboration segment. Past acquisitions include Slack, Mulesoft, and Tableau. Dan Ives continued to keep an Outperform rating but lowered his price target to $200 from $215 per share. Stifel analyst Parker Lane maintained his Buy rating but also lowered his price target to $175 from $185 per share.