Morgan Stanley Downgrades Salesforce Stock for Second Time This Month

Morgan Stanley downgraded Salesforce (CRM) from Overweight to Equal-weight, the second downgrade from an analyst in July. The analyst believes risk/reward is now balanced in the absence of a notable growth inflection.

Rating Change

Prior to the downgrade, the rating was Overweight. It is now Equal-weight. No new price target was provided.

Analyst Rationale

Morgan Stanley views Salesforce as 'actively disrupting itself to position for the agentic era,' but this effort has not yet translated into clear revenue or earnings growth. Without a 'notable growth inflection,' the analyst considers the stock fairly valued at current levels.

Context

This downgrade follows another from a different analyst earlier this month. Salesforce shares have fallen about 5% since the start of July, pressured by concerns over slowing enterprise software spending and competitive pressures.

Other analysts are divided: some believe Salesforce's investments in AI and cloud products will drive growth in the second half of the year, while others warn that competition from Microsoft and startups may limit market share gains.

What to Make of It

The consecutive downgrades reflect growing analyst concern over Salesforce's near-term growth prospects. Investors should watch next quarter's results and management guidance to assess whether the 'self-disruption' strategy is beginning to yield tangible results.