Why Analysts Are Growing Bullish on Salesforce Ahead of Earnings

By Chris Lange Updated Jan 12, 12:00PM EST · Published May 15, 11:20AM EDT

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Why Analysts Are Growing Bullish on Salesforce Ahead of Earnings — © Thinkstock

[cnxvideo id=”507734″ placement=”ros”]Salesforce.com Inc. (NYSE: CRM) is scheduled to release its most recently quarterly financial results after the markets close on Thursday. And analysts are already keying in on the stock. Most analysts are taking a positive stance on the stock and putting in higher targets.

Thomson Reuters consensus estimates call for $0.26 in earnings per share (EPS) and $2.35 billion in revenue. The same period of last year reportedly had $0.24 in EPS and $1.92 billion in revenue.

BMO Capital Markets reiterated an Outperform rating and raised its price target to $100 from $92, versus an $89.04 closing price. This new target implies an upside of 12%.

Credit Suisse reiterated an Outperform rating with a $110 price target, implying an upside of 23.5%. This call was based on positive data published by IDC noting that the overall business around data management platforms is expected to grow from $1.2 billion in 2016 to $10.6 billion in 2021, and it sees Salesforce winning from its recent Krux acquisition.

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Wedbush Securities reiterated an Outperform rating with a $102 price target. The firm noted that demand trends have improved since December across the software universe and that Salesforce’s work to accelerate its adoption in large enterprises is bearing fruit. In its most recent report, Wedbush detailed:

We believe demand trends have been improving since December across the software universe, and Salesforce’s work to accelerate its adoption in large enterprises is bearing fruit. 1Q can be a squirrely quarter (e.g. FY14) as sales groups rebuild pipelines and ramp their selling efforts, but we estimate CRM has room for a solid beat on revenue, EPS, and billings, and for a reasonable increase to its full-year revenue guidance. We think the share price reaction could be modestly positive on the print, but we don’t have pointers to a high-conviction trading call. On a 12-month basis, we would continue to accumulate. CRM shares have outperformed the market slightly since mid-April (+7% vs. +2% for the S&P 500), but valuation looks attractive (5x EV/ revenue and 25x EV/ FCF on CY18E) for a $9B+ run-rate company that’s still managing to reliably grow its top line over 20% and has a pure cloud and ratable model…. We expect achievement of our above-consensus 1Q outlook to reduce risk perceptions for FY18, given that 1Q is typically the most seasonally difficult quarter.

Shares of Salesforce were trading up 0.6% at $89.61 on Monday, with a consensus analyst price target of $97.00 and a 52-week trading range of $66.43 to $89.82.

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About the Author Chris Lange →

Chris Lange is a writer for 24/7 Wall St., based in Houston. He has covered financial markets over the past decade with an emphasis on healthcare, tech, and IPOs. During this time, he has published thousands of articles with insightful analysis across these complex fields. Currently, Lange's focus is on military and geopolitical topics.

Lange's work has been quoted or mentioned in Forbes, The New York Times, Business Insider, USA Today, MSN, Yahoo, The Verge, Vice, The Intelligencer, Quartz, Nasdaq, The Motley Fool, Fox Business, International Business Times, The Street, Seeking Alpha, Barron’s, Benzinga, and many other major publications.

A graduate of Southwestern University in Georgetown, Texas, Lange majored in business with a particular focus on investments. He has previous experience in the banking industry and startups.