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Dan Romanoff

Dan Romanoff, CPA, is an equity research analyst on the technology, media, and telecommunications team for Morningstar.

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Although we expect increasing cloud penetration and an evolving product suite to lead to healthy long-term growth, we are maintaining our fair value estimate for Splunk at $164 per share due to near-term cloud transition-related top-line pressures.

We see a long runway for growth as the company gains traction with Zoom Phone and evolves its main application to a communication platform, and we are impressed by management’s ability to overdeliver in terms of both growth and margins. Given exceptional results, strong guidance, and our annual model roll, we are once again raising our estimates, which drives our fair value estimate to $223 per share from $176.

Wide-moat Salesforce reported solid fiscal fourth-quarter results, including upside to both revenue and non-GAAP EPS expectations. We are raising our fair value estimate to $265 per share, from $253, based on rolling our forecast and the solid near-term results and guidance.

Wide-moat Amazon reported strong fourth-quarter results, including material upside to revenue, an EPS blowout, and upside to its revenue outlook for the first quarter. Amazon also announced that CEO Jeff Bezos will transition to the role of executive chairman in the third quarter and will be replaced by Andy Jassy, CEO of AWS.

While SMB generally remains weak, Azure remains strong, and gaming revenues surged as the global lockdowns continued throughout the quarter. Importantly, commercial bookings and RPO, two forward looking metrics, both grew in excess of revenues for the quarter. We remain impressed with Microsoft's ability to drive revenue and margins at this scale and we believe there is more to come on both the revenue and margin fronts. We raise our fair value estimate to $228 from $196 per share.