(Reuters) - Shares of cloud software makers rose on Wednesday after Salesforce.com Inc’s (CRM.N) upbeat quarterly earnings boosted Wall Street’s expectations for the fast-growing sector that came under pressure in the recent selloff in technology stocks.
The company beat analysts’ estimates for quarterly earnings on Tuesday and forecast 2020 revenue above expectations, helped by its lead in global customer relationship management market.
Shares of Salesforce rose 9 percent, while those of another cloud-based services firm - Nutanix Inc (NTNX.O), which also reported strong results, were up more than 8 percent. Cloud software makers Twilio Inc (TWLO.N) and Workday Inc (WDAY.O) also rose.
At least four brokerages raised their price targets on Salesforce’s stock, while Baird and Raymond James trimmed targets, citing the recent pullback in software stocks.
In October, the ISE Cloud Computing index .CPQ slumped more than 8 percent after six straight months of gains, as investors shed high-growth and high-valuation shares due to fears that a decade-old stock rally was coming to an end. Up to Tuesday’s close, it is still down about 4 percent in November.
In its earnings call, Salesforce executives were upbeat about macro conditions and said they continue to see “huge” investments in the sector.
Monness Crespi Hardt analyst Brian White described the tone of post-earnings call as the most bullish this earnings season from a tech company of Salesforce’s size.
“Co-CEO Marc Benioff’s comments around strong macro in Americas and APAC (he clarified only EMEA CEO’s are hinting more conservative) should remove portions of bear case around uncertain 2019,” Baird analyst Rob Oliver wrote in a note.
Reporting by Munsif Vengattil in Bengaluru