Technology

What Analysts Are Saying About Salesforce After Earnings

Chris Lange

Published: September 4, 2016 10:15 am

Last Updated: January 13, 2020 3:55 am

Salesforce.com Inc. (NYSE: CRM) released its most recent earnings report after the markets closed on Wednesday. Over the course of the week, the share price dropped about 6%. This was not necessarily based on the quarterly numbers, but really it was the near-term guidance that failed to impress. Despite the perceived trip up analysts took a fairly positive outlook following this earnings report, although some did trim their targets.

24/7 Wall St. has included some highlights from the earnings report, as well as what analysts are saying after the report. Previously we noted that Merrill Lynch believes that the stock could rally 200% or more by 2020.

The company said that it had $0.24 in earnings per share (EPS) on $2.04 billion in revenue. The consensus estimates from Thomson Reuters had called for EPS of $0.22 on $2.02 billion in revenue. In the same period of the previous year, Salesforce.com posted $0.19 in EPS and revenue of $1.63 billion.

Deferred revenue increased by 26% to $3.82 billion from last year, and 27% on a constant currency basis. Unbilled deferred revenue rose 29% to roughly $8.0 billion.

The outlook for the fiscal third quarter fell a little short of estimates. The company expects to have EPS in the range of $0.20 to $0.21 and revenues between $2.11 billion and $2.12 billion. The consensus estimates are $0.24 in EPS on $2.13 billion in revenue for the quarter.

Guidance for fiscal 2017 was given as EPS between $0.93 and $0.95 and revenues in the range of $8.275 billion to $8.325 billion, compared to the consensus estimates of $0.95 in EPS on $8.31 billion in revenue.

Wedbush Securities maintained an Outperform rating but lowered its price target to $96 from $98. The firm went on to say:

Our initial sense is that this is a hiccup that COO Keith Block is well-suited to work through and that salesforce.com will continue to drive demand by innovating as it has for the past 18 years, with the new Einstein artificial intelligence platform serving as a prime example.

After the earnings report, other analysts weighed in on the stock:

• Morgan Stanley kept its Overweight rating but lowered its target to $107 from $110.
• Barclays reiterated its Overweight rating and $89 price target.
• Deutsche Bank has a Buy rating and cut its price target to $90 from $95.
• Mizuho has a Buy rating and increased its price target to $100 from $85.
• BMO Capital Markets has an Outperform rating but lowered its target to $86 from $98.
• Wunderlich reiterated a Buy rating with $101 price target.
• Jefferies reiterated a Hold rating with an $80 price target.
• Citigroup maintained its Buy rating but lowered its target to $89 from $94.
• JMP Securities maintained a Market Outperform rating and a $92 price target.
• Goldman Sachs has a Buy rating and lowered its price target to $96 from $103.

Shares of Salesforce ended last week at $75.10, with a consensus analyst price target of $96.72 and a 52-week trading range of $52.60 to $84.48.