Is Salesforce stock a ‘buy’ after naming three new directors?

By:
on Jan 28, 2023
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  • Salesforce named three new independent directors on Friday.
  • Cowen analyst Derrick Wood downgraded "CRM" last week.
  • Salesforce stock is currently up more than 20% for the year.

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Salesforce Inc (NYSE: CRM) is in focus after naming three new directors to its board amidst pressure from activist investors to boost profits and shareholder returns.

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Here’s who is joining its board

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On Friday, the cloud company said Mason Morfit – the Chief Executive of ValueAct Capital will join as an independent director. Salesforce stock is currently down over 40% versus its record high.

Earlier this week, Elliott Management revealed a multi-billion-dollar stake in Salesforce that Invezz covered here. The activist investor is expected to soon nominate a few directors to its board as well.

Meanwhile, the software company has also brought in Arnold Donald (Carnival CEO) and Sachin Mehra (Mastercard CFO) as independent directors, as per the press release on Friday.

Salesforce recently revealed plans of lowering its global workforce by 10%. But analysts expect activist investors, including Starboard Value and Inclusive Capital, to push for more layoffs moving forward.

Is Salesforce stock worth buying?

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Salesforce stock, nonetheless, has had a rather exciting start to the new year, now up more than 20% year-to-date. But a Cowen analyst warns that it’s pretty much as far as it goes.

Last week, Derrick Wood downgraded “CRM” to market perform, which, he said, should not be worth more than $160 a share.

With several recent exec departures and major restructuring underway, we expect elevated levels of disruption risk. Tougher macro and our concern of CRM customer spending behaviour during renewals [suggest] uneven growth in the qtrs ahead.

Salesforce Inc is calling for a single-digit percentage growth only in its current quarter revenue.

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