Analyst expresses concerns over execution, mergers, and AI monetization
Shares of Salesforce Inc. (CRM) and Unity Software Inc. (U) were declining on Monday following a downgrade by Piper Sandler analyst Brent Bracelin. Bracelin lowered the stocks from overweight to neutral due to increasing risks and a more balanced risk-reward profile.
Salesforce Struggles Amid Execution and Mergers Worries
Bracelin pointed out the growing risk around execution and mergers as the reason for downgrading Salesforce. He also cited “AI monetization uncertainty” as a contributing factor. With shares already surging by over 50% this year, Bracelin believes the risk-reward profile is now more even. Salesforce shares were down 1.6% in morning trading on Monday.
Unity Faces Potential Downsides After Pricing Spat
Bracelin also expressed concerns over Unity, downgrading the company to a neutral stance. He highlighted “potential downside risks to 2024 ad growth after the pricing spat with game developers” as a key factor behind this decision. As a result of the downgrade, Unity shares were down 2.5% early in the day.
Other Downgraded Stocks
Aside from Salesforce and Unity, Bracelin made additional downgrades. Asana Inc. (ASAN) and Alteryx Inc. (AYX) were both downgraded to underweight from neutral. Matterport Inc. (MTTR) saw its rating lowered from overweight to neutral.
Despite his more cautious software stance, Bracelin revealed his highest-conviction picks. Microsoft Corp. (MSFT) was highlighted as his top choice among large-capitalization names, while Procore Technologies Inc. (PCOR) was rated highly among small caps.