UBS Flags Red Flag for Salesforce's Second-Half Growth Story

Salesforce's upcoming earnings report on August 26 may not bring the revenue acceleration investors have been expecting, according to UBS. The investment bank says its conversations with mid-to-large customers indicate a muted demand for the customer-relationship management software giant's products.

UBS notes that Salesforce has guided to $11.27-11.35 billion of revenue, but it's the second-half revenue pickup investors are concerned about. The company expects fiscal second-quarter earnings per share of $3.44 versus analyst estimates of $3.27.

While UBS still expects Salesforce to beat profit expectations through cost control, the market reaction may hinge less on the Q2 'beat or miss' and more on whether management keeps, trims, or delays the second-half growth narrative.