Wedbush analyst Michael Nemeroff offered up conflicting views Tuesday on Salesforce and SAP -- a pair of enterprise software rivals that appear to be headed in opposite directions going into the new decade.
Nemeroff raised Salesforce (NYSE: CRM) from a "neutral" rating to "outperform," saying that the on-demand software vendor has a "strong and stable base of recurring revenue" and "low and very achievable expectations for growing in fiscal 2011."
Earlier this month, Salesforce topped analysts estimates in its latest quarter as year-over-year sales surged more than 20 percent.
Salesforce shares subsequently stormed up to a 52-week high of $67.72 a share earlier this month. In Tuesday afternoon trading, the stock was up $0.39 a share, or 1 percent, to $64.89.
With the Nemeroff upgrade, 19 of the 33 analysts covering Salesforce maintain either a "buy" or "strong buy" recommendation.
Meanwhile, he downgraded SAP from a "neutral" rating to "underperform" and set a 12-month price target of $49 a share.
Nemeroff justified the move by citing the German software giant's "comparatively weak core business fundamentals" which he said will continue for at least the next few quarters.
He also said that incremental growth from the likes of Salesforce and other on-demand enterprise resource planning (ERP) vendors would "chip away at the company's market share and renewal rate" among smaller customers.
SAP, which earlier this week announced that it and Microsoft would team up to selling budgeting, planning and forecasting applications to their shared customers, has seen its stock make steady advances for most of the past year.
SAP shares trimmed $0.38 a share, or 1 percent, to $48.01 in Tuesday trading, down from its peak of $52.73 established last month.
Now 12 of the 16 analysts following SAP maintain either a "hold" or "underperform" rating on the stock.
TAGS: Microsoft, Oracle, SAP, SaaS, Salesforce
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