Analysts Stocks

      Weekly Updates - Dec 4, 2022

      Selected stock price news highlights of the week

      By: Matthew Otto

       

      As we continue with the earning season mega tech companies caught the spotlight in firms that offer software as a service SaaS particularly Salesforce the market leader with customer relations manager, Crowdstrike – cybersecurity and Intuit – financial software also got major attention. All three stocks have caught negative attention while some comfort came to retail.

       

      Salesforce, announced results for its third quarter fiscal 2023 ended October 31, 2022.

      Salesforce achieved revenue of $7.84 billion for the quarter, up 14% year-over-year (“Y/Y”) and 19% in constant currency (“CC”). GAAP earnings per share were $0.21 and non-GAAP earnings per share were $1.40. Current remaining performance obligation was $20.9 billion, up 11% Y/Y and 15% CC.

       

      For the fourth quarter of fiscal 2023, Salesforce is providing the following guidance:

      Revenue is expected to be in the range of $7.932 billion to $8.032 billion, up 8% to 10% Y/Y and 12% to 13% CC.

      Full year fiscal 2023 revenue is now expected to be in the range of $30.9 billion to $31.0 billion, up 17% Y/Y and 20% CC.

      GAAP operating margin is expected to be ~3.8%. Non-GAAP operating margin is expected to be ~20.7%.

      Operating cash flow is expected to be ~16% growth Y/Y.

      The company returned $1.7 billion to shareholders during the quarter through share repurchases under its stock repurchase program.”We are excited about our fourth quarter guidance as we continue to invest for long term growth,” said Bruce Boerner, CFO, Salesforce. “Our strong free cash flow enables us to return cash to shareholders while also investing for future success.”

       

      “We had a solid quarter with revenue of $7.84 billion, up 14% year-over-year or 19% growth in constant currency, and record operating margin,” said Marc Benioff, Chair & Co-CEO, Salesforce. “We’re grateful to our customers for their commitment, especially as we help them succeed in this challenging environment. There’s never been a more important time for our customers to connect with their customers in a whole new way.” “Our customers are tapping into the power of Customer 360 to gain faster time to value and reduce costs,” said Bret Taylor, Co-CEO, Salesforce. “We continued to drive profitable growth in the quarter.” This strong performance was driven by continued momentum in our core CRM business and growth across our core platform and innovative new products. We’re pleased with our progress and remain focused on executing our long-term strategy.”

      Salesforce continues to be the trusted partner for companies of all sizes and industries globally. In addition to being recognized as a Leader in Gartner’s Magic Quadrant for Enterprise Low-Code Platform1 and as a Leader in The Forrester Wave™

      Wall Street Action

      • Wolfe Research analyst Alex Zukin downgraded the stock from Outperform to Peer Perform.
      • Keybanc analyst Michael Turits downgraded from $200 to $191 and downgraded from $210 to $200.
      • Jefferies analyst Brent Thill downgraded from $240 to $230.
      • BAMLSecurities analyst Brad Sills also downgraded from $210 to $200.
      • Canaccord Genuity analyst David Hynes went as low as $180, down from $215.
      • Truist Securities analyst Terry Tillman downgraded from $240 to $210.
      • Cowen & Co. analyst J. Derrick Wood downgraded from $210 to $195.
      • Wedbush analyst Daniel Ives downgraded from $215 to $200.
      • Deutsche Bank analyst Brad Zelnick downgraded from $220 to $200 while maintaining a Buy rating.
      • Barclays analyst Raimo Lenschow downgraded from $193 to $180.
      • Morgan Stanley analyst Keith Weiss downgraded from $273 to $250.
      • BMO Capital analyst Keith Bachman downgraded from $180 to $172.
      • JP Morgan analyst Mark Murphy downgraded from $245 to $200.
      • RBC Capital analyst Rishi Jaluria downgraded from $235 to $200.
      • Wells Fargo analyst Michael Turrin downgraded from $190 to $175.
      • Baird analyst Rob Oliver downgraded from $210 to $200.

      CrowdStrike announced its financial results for the third quarter of fiscal year 2023

      Reporting 53% year-over-year revenue growth to reach $581 million. The company also achieved record cash flow from operations of $243 million and record free cash flow of $174 million.

      “In the face of increased macroeconomic headwinds, CrowdStrike delivered revenue and earnings results ahead of our guidance,” said Burt Podbere, Chief Financial Officer of CrowdStrike. “We will continue to focus on delivering strong unit economics as we balance growth with profitability and free cash flow.”

      AAP loss from operations was $56.4 million in the third quarter, compared to $40.3 million in the same period last year. However, non-GAAP income from operations grew to $89.7 million, up from $50.7 million in the third quarter of fiscal 2022.

      Looking ahead, Podbere commented, “We are well-positioned for continued success as we enter fiscal 2024 and beyond.”

      George Kurtz, CrowdStrike’s co-founder and chief executive officer, said the company delivered robust growth at scale, strong retention rates, growing module adoption, record net new ARR from emerging products and a record number of customers contributing at least $1 million to net new ARR. However, total net new ARR was below the company’s expectations as increased macroeconomic headwinds elongated sales cycles with smaller customers and caused some larger customers to pursue multi-phase subscription start dates, which delays ARR recognition until future quarters. Kurtz said CrowdStrike differentiates itself from the competition as a platform consolidator with industry leading efficacy and empowers customers, positioning the company to capture enduring industry trends.

      Wall Street Action

      • Davidson analyst Rudy Kessinger downgraded the stock from $235 to $145 while maintaining his buy rating.
      • MKM Partners analyst Catharine Trebnick lowered her price target from $200 to $190 while keeping her buy rating intact.
      • Cowen analyst Shaul Eyal downgraded CRWD from $220 to $180 while maintaining his outperformance rating.
      • Deutsche Bank analyst Brad Zelnick lowered his price target from $230 to $150, citing higher than expected costs associated with the company’s recent expansion.
      • Wells Fargo analyst Andrew Nowinski lowered his price target from $210 to $165, remaining bullish on the stock.
      • Morgan Stanley analyst Hamza Fodderwala lowered his target from $190 to $172.
      • RBC analyst Matthew Hedberg lowered his target from $200 to $165.
      • Baird analyst Shrenik Kothari lowered his target from $237 to $185.
      • Truist analyst Joel Fishbein lowered his target from $275 to $200.
      • Stephens analyst Brian Colley lowered his target from $205 to $161.
      • Mizuho analyst Gregg Moskowitz lowered his target from $205 to $175.
      • JMP Securities analyst Trevor Walsh downgraded from $275 to $235 while maintaining from Market Outperform.
      • BTIG analyst Gray Powell downgraded from $234 to $148 while maintaining from Buy.
      • Needham analyst Alex Henderson downgraded from $225 to $165 while maintaining from Buy.
      • Piper Sandler analyst Rob Owens downgraded from $240 to $175 while maintaining from Overweight.
      • Stifel analyst Brad Reback downgraded from $225 to $120 while Downgrading from Buy to Hold.
      • Jefferies analyst Joseph Gallo downgraded from $220 to $175 while maintaining from Buy.
      • Barclays analyst Saket Kalia downgraded from $180 to $155 while maintaining from Overweight.
      • Keybanc analyst Michael Turits downgraded the stock from $210 to $200 today, while maintaining his overweight rating.
      • Wolfe Research analyst Alex Zukin recently downgraded the stock and lowered the price target.
      • Citigroup analyst Fatima Boolani also recently downgraded the stock and lowered the price target.
      • Redburn Partners analyst Nina Marques initiated coverage of CRWD with a $175 price target.

       

      Intuit  announced financial results for the first quarter of fiscal year 2023

      “We had a strong first quarter as we innovated and delivered on our strategy to be the global AI-driven expert platform powering prosperity for consumers and small businesses,” said Sasan Goodarzi, Intuit’s chief executive officer. “We continue to see proof that the benefits of our financial technology platform are more mission-critical than ever to our customers in an uncertain macro environment.”

      “While we are pleased with first quarter results, we shared earlier this month that Credit Karma experienced continuing deterioration across all verticals in the last few weeks of the first quarter. Despite this impact to Credit Karma, we are reiterating operating income and earnings per share guidance for fiscal year 2023,” said Michelle Clatterbuck, CFO. “Our first quarter results give us continued confidence in the long-term opportunity for Intuit to drive sustainable, profitable growth.”

      Total revenue to $2.6 billion in the quarter ended November 29, 2022, up 29 percent from the prior year. The company attributed the growth to strong performance in its Small Business and Self-Employed Group, which saw revenue increase 38 percent to $2.0 billion. Excluding Mailchimp revenue of $264 million, Small Business and Self-Employed Group revenue still grew 19 percent. The company’s Online Ecosystem also performed well, with revenue increasing 60 percent to $1.3 billion. Excluding Mailchimp, Online Ecosystem revenue still grew 28 percent. Credit Karma revenue increased 2 percent to $425 million, while Consumer Group revenue grew to $150 million, up from $120 million the prior year. ProTax Group revenue also increased, to $34 million from $26 million the prior year.

      Wall Street Action

      • Oppenheimer analyst Scott Schneeberger lowered the price target from $516 to $476 while maintaining an Outperform rating.
      • Deutsche Bank analyst Brad Zelnick reduced the price target from $560 to $525 while keeping a Buy rating.
      • BAMLSecurities analyst Brad Sills brought down the price target from $500 to $475 while maintaining a Buy rating.
      • Wells Fargo analyst Michael Turrin decreased the price target from $525 to $475 while keeping an Overweight rating.
      • BMO Capital analyst Daniel Jester downgraded the price target from $467 to $448 while maintaining an Outperform rating.
      • Jefferies analyst Brent Thill lowered the price target from $575 to $525 while keeping a Buy rating.
      • Barclays analyst Raimo Lenschow reduced the price target from $490 to $465 while maintaining an Overweight rating.
      • Piper Sandler analyst Arvind Ramnani dropped the price target from $553 to $459 while maintaining an Overweight rating.
      • Keybanc analyst Josh Beck lowered the price target from $525 to $400 while maintaining an Overweight rating.

       

      NetApp announced its second quarter results for fiscal year 2023

      Reporting 6% growth in net revenues compared to the same period last year. Product revenue also saw a 3% year-over-year increase, reaching $837 million. This marks the seventh consecutive quarter of product revenue growth for the company. In addition, NetApp’s billings increased by 3% year-over-year, totaling $1.60 billion. The company attributes much of this growth to strong performance in its hybrid cloud segment, which saw revenue of $1.52 billion in the second quarter. NetApp’s all-flash array annualized revenue run rate also increased by 2% year-over-year, reaching $3.1 billion. Finally, the company returned $258 million to shareholders through share repurchases and cash dividends during the quarter

      With all-time highs for revenue, billings, gross profit dollars, operating income, and EPS. The company attributes its success to its “modern approach to the hybrid multicloud,” which delivers value to customers and creates opportunities for NetApp. The company’s public cloud segment saw particular growth in the quarter, with revenue reaching $142 million, compared to $87 million in the second quarter of fiscal year 2022. NetApp remains focused on innovation and execution in a challenging macro environment and is well-positioned for continued success in the coming quarters.

      Wall Street Action

      • Citigroup analyst Jim Suva lowered the stock from $120 to $110 while upholding a Buy rating.
      • Northland Capital Markets analyst Nehal Chokshi reduced the stock from $101 to $99 while maintaining an Outperform rating.
      • Cowen analyst Krish Sankar decreased the stock from $93 to $80 while upholding an Outperform rating.
      • Wedbush analyst Matt Bryson downgraded the stock from $80 to $70 while maintaining a Neutral rating.
      • UBS analyst David Vogt downgraded the stock from $80 to $78 while maintaining a Neutral rating.
      • Wells Fargo analyst Aaron Rakers downgraded the stock from $85 to $70 while maintaining an Equal-Weight rating.
      • Morgan Stanley analyst Meta Marshall cut the stock from $71 to $66 while maintaining an Equal-Weight rating.
      • Susquehanna analyst Mehdi Hosseini downgraded the stock from $75 to $65 while maintaining a Neutral rating.
      • Deutsche Bank analyst Sidney Ho lowered the stock from $84 to $78 while maintaining a Buy rating.
      • Raymond James analyst Simon Leopold downgraded the stock from $105 to $80 while maintaining an Outperform rating.
      • Citigroup analyst Jim Suva reduced the stock from $120 to $110 while upholding a Buy rating.
      • Barclays analyst Tim Long lowered the stock from $95 to $83 while maintaining an Overweight rating.

       

      ULTA had received positive feedback continuing the trend for retail.

      Ulta Beauty Inc. reported net sales of $2.3 billion, an increase of 17.2% from the $2.0 billion reported in the third quarter of fiscal 2021. The company attributed the sales growth primarily to the continuing resilience of the beauty category, retail price increases, and the impact of new brands and product innovation. Comparable sales (sales for stores open at least 14 months and e-commerce sales) increased 14.6% compared to an increase of 25.8% in the third quarter of fiscal 2021, driven by a 10.7% increase in transactions and a 3.5% increase in average ticket. Gross profit increased 22.0% to $962.8 million compared to $789.5 million in the third quarter of fiscal 2021, driven by an improvement in gross margin to 41.2% from 39.2%. Selling, general and administrative (SG&A) expenses increased 18.6% to $597.2 million compared to $503.4 million in the second quarter of fiscal 2021, primarily due to deleverage in store payroll and benefits and corporate overhead due to strategic investments, partially offset by lower marketing expenses. As a percentage of net sales, SG&A expenses increased to 25.5% compared to 25.2% in the second quarter of fiscal 2021. Operating income increased 27.3% to $361.9 million, or 15.5% of net sales, compared to $284.2 million, or 14.2% of net sales, in the second quarter of fiscal 2021. Net income increased 27.5% to $274.6 million compared to $215.3 million in the second quarter of last year, and diluted earnings per share increased 28.0% to $2.48 compared to $1.94 in the second quarter of last year.

      “Amidst a challenging macro environment, the Ulta Beauty team delivered yet another outstanding quarter, with strong top and bottom-line results and growth across all major categories and channels,” said Dave Kimbell, chief executive officer. “Our third quarter results reflect the sustained resilience of the beauty category and the strong emotional connection and loyalty we have cultivated with our guests. I am confident our business model, which offers unmatched breadth, value, and convenience, is even more relevant today and unlocks opportunities to further delight guests as we continue to lead the beauty category.”

      As guidance was provided for the upcoming holiday season. Results were positive, with EPS and sales both coming in ahead of expectations.

      Wall Street Action

      • UBS analyst Michael Lasser hiked his price target from $540 to $590 while upholding his Buy rating.
      • Wells Fargo analyst Ike Boruchow boosted his price target from $425 to $450 while maintaining his Equal-Weight rating.
      • Oppenheimer analyst Rupesh Parikh increased his price target from $505 to $535 while maintaining his Outperform rating.
      • Piper Sandler analyst Korinne Wolfmeyer raised her price target from $525 to $570 while keeping her Overweight rating.
      • Telsey Advisory Group analyst Dana Telsey upped her price target from $510 to $575 while maintaining her Outperform rating.
      • Piper Sandler analyst Korinne Wolfmeyer revised her price target from $510 to $525 while maintaining her Overweight rating.