Piper Sandler downgraded software stocks Salesforce (NYSE:CRM), Matterport Inc (NASDAQ:MTTR), and Unity Software Inc (NYSE:U) to Neutral in a note Monday while also lowering Asana Inc (NYSE:ASAN) and Alteryx (NYSE:AYX) to Underweight.
Analysts explained the firm is proactively lowering its 2024 growth estimates and price targets across its coverage list to better reflect near-term demand stabilization trends that "may not support what appears to be an overly optimistic acceleration in median consensus growth rates."
"While we are encouraged that SW [Sector Weight] sector valuations and growth could be nearing a bottom, we have less confidence in acceleration potential," the analysts wrote.
"It remains a "possibility" but doubtful we'll get management blessing to model accelerating growth from formal guidance in January/February," they added.
Piper Sandler said it has lowered CRM (price target cut to $232, down from $268) to Neutral based on increasing execution and M&A risks, AI monetization uncertainty, and its risk-reward, given CRM shares have risen 54% so far this year. Unity (price target lowered to $30 from $48) was downgraded based on the potential downside risks to 2024 ad growth after the company's pricing spat with game developers.
Meanwhile, ASAN (price target moved to $16 from $24) was lowered due to lingering renewal headwinds that limit visibility into the timing of a recovery. AYX (unchanged $30 price target) was cut on risks to the 2024 growth recovery thesis, while MTTR (price target cut to $2 from $4) was downgraded based on a 2024 acceleration that appears too optimistic.