Wedbush: Salesforce Still Worth $66/Share

In a report published Tuesday, Wedbush analysts maintained a Neutral rating on

, with a price target of $66. The disappointing enterprise performance of salesforce.com has been masked by the outperformance of the company's commercial (inside) sales unit serving SMB customers. Also, several factors, including many that are beyond the company's control, are affecting CRM's enterprise (field) sales. "These include execution, maturation of the sales automation opportunity, and the growing impact of cyclical demand conditions on the company," the analysts stated. Another weak factor in Salesforce.com's performance is the slow integration of ExactTarget with the company's core business. While CRM needs to pursue marketing and sales synergies between its core business and the operations of ExactTarget, the lack of overlap between the target customers is making the process difficult. Salesforce.com's performance is driven by its innovative SAAS business and technical model and effective sales and marketing but it is witnessing secular deceleration as it grows from a larger base. The company has the potential of expanding its B2B adj. operating margins to 25 percent in case of a slowdown in revenue growth, but its overall margins are likely to be restricted by issues related to integration of ET's core email marketing business. "Given this backdrop, it looks as if salesforce.com critically needs a good 1Q performance from this team to get reps on track for their FY16 quotas. We see some potential for a reversion to the mean on enterprise execution, but the quarter will likely suffer from incremental FX headwinds," the analysts added. "Service Cloud, Heroku, and Commercial Sales are bright spots that could boost salesforce.com's future performance," the analysts mentioned.