- Morgan Stanley analysts Keith Weiss and Josh Baer highlighted that SaaS valuations rebounded in recent months, with the average SaaS stock up 22% over the last three months (though still down ~34% YTD).
- The team thinks that companies demonstrate stable execution and highlight only isolated demand impacts, emphasizing margins and focusing on efficiency (protect FCF).
- At the same time, de-risking forward guidance stands the best chance for outperformance in Q2 results.
- With this backdrop in mind, the team favors the risk/reward at Salesforce, Inc (NYSE:CRM) (OverWeight, $273 price target), with low investor growth expectations and little appreciation for the margin improvement story, and an underappreciated valuation.
- On the positive side, the team also likes Smartsheet Inc (NYSE: SMAR) (OverWeight, $68 price target) at a ~50% discount to SaaS peers signifying a significant discount for a company inflecting FCF to positive this year, already embedding macro prudence in FY23 guidance.
- Tactically, the team sees a more challenging setup for Workday, Inc (NASDAQ: WDAY) (OverWeight, $282 price target), which is a likely candidate for longer-sales cycles / slipped deals and still needs to de-risk H2.
- The team acknowledged Zoom Video Communications, Inc (NASDAQ: ZM) (OverWeight, $140 price target) with conservative margins overshadowed by topline concerns.
- The team also mentioned DocuSign, Inc (NASDAQ: DOCU) (EqualWeight, $73 price target), which lacks visibility into growth, and Asana, Inc (NYSE: ASAN) (EqualWeight, $35 price target), which is operating at a negative ‘Rule of 40’.
- Price Action: CRM shares traded lower by 0.63% at $189.82 on the last check Tuesday.
Summit Midstream Partners Q4 EPS $(3.03) Misses $(1.30) Estimate, Sales $85.72M Beat $70.50M Estimate
Summit Midstream Partners (NYSE:SMLP) reported quarterly losses of $(3.03) per share which missed the analyst consensus estimate of $(1.30) by 133.08 percent. This is a 3.41 percent decrease over losses of $(2.93) per
