What to Expect When Salesforce Reports After the Close

Salesforce.com Inc. (NYSE: CRM | CRM Price Prediction) is scheduled to release its fiscal second-quarter financial results after the markets close on Thursday. The consensus estimates are calling for $0.47 in earnings per share (EPS) and $3.95 billion in revenue. The same period of last year reportedly had $0.71 in EPS and $3.28 billion in revenue.

Earlier this quarter, Salesforce announced that it would acquire Tableau Software in an all-stock transaction. The boards of directors of both companies have approved the transaction.

Under the terms, each share of Tableau Class A and Class B common stock will be exchanged for 1.103 shares of Salesforce common stock, representing an enterprise value of roughly $15.7 billion (net of cash).

The acquisition of Tableau is expected to be completed during Salesforce’s fiscal third quarter, ending October 31, 2019, subject to customary closing conditions.

[nativounit]

The transaction is expected to increase Salesforce’s fiscal 2020 total revenue by about $350 million to $400 million. This estimate reflects a fair value adjustment to reduce unearned revenue and unbilled unearned revenue by approximately 30%. Fiscal 2020 revenue is now expected to be in the range of $16.45 billion to $16.65 billion, an increase of 24% to 25% year over year.

Excluding Thursday’s move, Salesforce had underperformed the broad markets, with the stock up nearly 8% year to date. In the past 52 weeks, the stock was up only 1%.

A few analysts weighed in on Salesforce ahead of the report:

• OTR Global has a Positive rating.
• Wedbush has an Outperform rating with a $184 target.
• Nomura has a Buy rating with a $180 price target.
• Compass Point has a Buy rating and a $190 price target.
• Morgan Stanley has a Buy rating with a $178 price target.
• Jefferies has a Buy rating with a $165 price target.

Shares of Salesforce traded down less than 1% on Thursday to $146.54, in a 52-week range of $113.60 to $167.56. The consensus price target is $182.72.

[recirclink id=570574]
[wallst_email_signup]