So while Salesforce is still growing, some younger and smaller cloud companies are growing faster.
As it surpasses Oracle, some investors would like to see more from Salesforce in the way of profit. Evercore analysts led by Kirk Materne explained the situation in a note to clients on June 23: As CRM continues to scale and its organic growth rate normalizes into the high teens, the company's ability to attract new investors that are more focused on cash flow generation has been marred by some of the recent acquisitions, as well as what is perceived as a "lukewarm" commitment to driving operating leverage.
The analysts, who have the equivalent of a buy rating on Salesforce stock, came up with a few places where Salesforce can cut costs, including advertising and events. Raising its operating margin could lift Salesforce stock further, they argued, and that could put further distance between the company and Oracle.
"Delivering slightly higher organic margin expansion and cash flow could help drive a re-rate in the share price and a higher share price HELPS CRM's long-term GROWTH ambitions as it provides more optionality around M&A," they wrote.
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