Salesforce, Workday slip as Monness, Crespi, Hardt downgrades pair on worries over 2023
Takako Hatayama-Phillips

Investment firm Monness, Crespi, Hardt downgraded both Salesforce (NYSE:CRM) and Workday (NASDAQ:WDAY) on Thursday, citing the recent rally in tech stocks.
Analyst Brian White lowered his rating on both enterprise software companies to neutral from buy, pointing out that the pair will face a challenging time over the next 12 to 18 months as the economy gets weaker and a potential recession gets underway. 
Regarding Salesforce (CRM), which is scheduled to report third-quarter results on November 30, White said the company is "well positioned" for the ongoing digital transformation, but it has "acquired with great fervor, engaged in profligate spending, and we believe the darkest days of this downturn are ahead of us."
White added that Salesforce (CRM) is estimated to generate $7.828B in revenue for the quarter, but earnings per share are a "wildcard" because of mark-to-market accounting of its strategic investments.
For Workday (WDAY), which is scheduled to report November 29, White believes the company will continue to expand the reach of its cloud platform, but added that sales cycles have lengthened and some deals have been delayed.
The analyst expects Workday (WDAY) to generate $1.584B in revenue and 81 cents per share in earnings for the third-quarter.
The downgrades to Salesforce (CRM) and Workday (WDAY), which fell roughly 3% each in premarket trading, also impacted several other enterprise software stocks.
Adobe (ADBE), Snowflake (SNOW), Datadog (DDOG) and Microsoft (MSFT) all declined 1.5% or more in premarket trading.
Salesforce (CRM) recently laid off hundreds of employees due to the slowing economy, with the total cuts potentially climbing as high 2,500.
Analysts are mostly positive on Salesforce (CRM). It has a BUY rating from Seeking Alpha authors, while Wall Street analysts rate it a BUY. Conversely, Seeking Alpha's quant system, which consistently beats the market, also rates CRM a HOLD.