According to Bernstein, Salesforce is in “growth purgatory” and may have some difficulty finding its way out. Analyst Mark Moerdler downgraded the software giant to underperforming the market, saying the stock looks overvalued due to the company’s lower margins and quality earnings. company when compared with companies in the same industry. “Salesforce growth is slowing, and mgmt is making cost cuts and forces massive as it scrambles to drive margin improvements,” he wrote in a Wednesday note to clients. “These cuts will take time to complete and we think will exacerbate the slowdown in growth. Much of the savings are needed to offset slowing growth, and therefore, large profit margin increases are unlikely.” Salesforce’s growth has been decelerating for years, according to Moerdler, with a slew of acquisitions helping to insulate the downward cycle. “As the headwinds from M&A are no longer enough, core markets move toward cloud saturation, increasing competition, and macro issues impacting growth, management,” he said. is actively pivoting to boost margins.” “But the cuts will negatively impact efficiency, growth, and customer/employee satisfaction.” Going forward, Moerdler also thinks these margin improvements will take time to take effect and will likely be much lower than consensus expectations. With this in mind, Moerdler cut the company’s price target to $119 from $134, suggesting the stock will be down 19% from Tuesday’s closing price. Salesforce shares plummeted in 2022, falling nearly 48% as growth names took a hit in an environment defined by rising interest rates and recession fears. Like other tech companies looking to cut costs after moving into expansion mode, Salesforce announced plans this month to cut 10% of its workforce, or more than 7,000 employees. Shares fell more than 2% before the bell. – CNBC’s Michael Bloom contributed reporting