Enterprise software has 'some softness,' but Workday, Salesforce 'largely unaffected': Loop Capital
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Enterprise software demand is starting to see "some softness," according to investment firm Loop Capital, but two of the industry's most established companies, Workday (NASDAQ:WDAY) and Salesforce (NYSE:CRM), are "largely unaffected," the firm said.
Analyst Yun Kim wrote that while there are not enough data points to figure out which projects and companies are "more vulnerable" in the current environment, the companies that are helping with the digital transformation are not impacted.
"[O]ne feedback we received from our industry contacts is that digital transformation initiatives that are driven by solutions from larger, more established software vendors such as [Salesforce], [Workday] and SAP are largely unaffected by the current slowdown in spending," Kim wrote, adding that checks with two companies "indicate largely steady business trends that are consistent with their prior quarters."
Workday (WDAY) shares fell nearly 1.5% to $163.69 in premarket trading on Tuesday, while Salesforce (CRM) fell nearly 2% to $157.38.
Nonetheless, Kim said Workday (WDAY) and Salesforce (CRM) are likely to remain conservative in their outlook for the rest of the year, as other enterprise software companies have been. 
Workday (WDAY) is slated to report fiscal first-quarter results on May 26, while Salesforce (CRM) is set to report on May 31.
In addition, Kim noted that the IT labor market is starting to ease, with some signs of thawing, which further adds to the picture that the IT spending market has shown "signs of a slowdown in recent weeks, as many large corporations take a more conservative approach to spending going forward." 
On Monday, investment firm Cowen cut its price target on Salesforce (CRM), noting "mixed" checks going into fourth-quarter earnings for the cloud computing company.