Published - August 1rst, 2023 @ 3:20 PM (GMT+2)

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Salesforce Cut at Morgan Stanley Ahead of Q2
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Salesforce (NYSE:CRM), a leading cloud-based software company, has been downgraded by Morgan Stanley ahead of its Q2 earnings report. While the bank remains confident in Salesforce's longer-term opportunity to further penetrate large enterprises with more vertically oriented solutions, near-term catalysts, including margin expansion and price increases, are now in the rear-view mirror.

Generative AI could potentially serve as the next catalyst for a higher Salesforce rating. However, Morgan Stanley does not foresee this happening in the short term due to limited access to its Unlimited Edition tiers in Sales and Service Clouds, as well as uncertainty surrounding "access, capabilities, and pricing of consumption credits (which are expected to be the more significant driver on GenAI-related growth vs. seat-based uplifts)." The company is set to report its Q2/24 earnings on August 23.

Other Notable Downgrades
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Alongside Salesforce, other significant analyst cuts have been observed in companies like Estée Lauder (EL), Tractor Supply (TSCO), and General Electric (GE). The downgrades reflect various concerns and uncertainties surrounding these companies' growth prospects and performance going forward.

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Estée Lauder was slashed at Citi, expecting weaker results over the next few quarters due to negative incremental data points such as China macros/category trends, share dynamics, and a cybersecurity incident.

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Tractor Supply's Q2 results led to the downgrade, stemming from concerns about the company's growth prospects and uncertainty surrounding its performance going forward.
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General Electric was also downgraded, reflecting broader market trends and specific challenges faced by the company.

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Market Reactions
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The downgrades have led to market reactions, with Salesforce's stock (CRM) declining by 0.26%. Estée Lauder (EL) saw a decrease of 0.24%, while General Electric (GE) experienced a 0.13% drop. Tractor Supply (TSCO) remained stable with a 0.00% change.

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Conclusion
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The recent downgrades, particularly the cut in Salesforce's rating, highlight the complexities and uncertainties in the current market landscape. Investors and traders must remain vigilant and consider these analyst insights when making investment decisions. Focusing on near-term catalysts and future growth potential, especially for Salesforce, provides valuable insights into the evolving dynamics of the technology and broader market sectors.

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The information on mexem.com is for general informational purposes only. It should not be regarded as investment advice. Investing in stocks involves risk. A stock's past performance is not a reliable indicator of its future performance. Always consult a financial advisor or trusted sources before making any investment decisions

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