Salesforce Earnings Preview: What Wall Street's Top Analysts Are Saying

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Salesforce.com, inc. CRM is scheduled to report its first quarter results Wednesday after market close.

The Estimize Consensus earnings per share estimate (based on 57 estimates) is $0.15 on revenue of $1.508 billion. This compares to the Wall Street estimate calling for an earnings per share of $0.14 on revenue of $1.50 billion.

JMP: What To Watch For On The Call

Patrick Walravens commented in a note that he doesn't have a "strong sense" of the tone of the business in the quarter and investors should focus on the post-earnings conference call.

Walravens stated that investors should look out for any commentary on M&A activity, commentary about partnerships with potential acquirers including Google Inc GOOG GOOGL, Microsoft Corporation MSFT and Oracle Corporation ORCL.

Investors should also pay attention to any commentary surrounding the company's year-over-year growth rates for each of the company's four clouds which will be disclosed for the first time ever this quarter. The analyst is also looking for any updates on Wave Analytics and the Salesforce1 platform and the impact of foreign exchange, which is estimated to have created a 4 percent headwind to year-over-year revenue growth.

Related Link: Salesforce: Why Take-Out Talk Could Trump Earnings

Wedbush: Late Quarter Checks Negative

Steve Koening commented in a note that his late-quarter checks suggested Salesforce's enterprise sales organization had not been performing up to expectations as of late.

According to Koening, the commercial (inside) sales organization has been executing "well" but have been covering up a shortfall in enterprise (field) sales results. The analyst noted that several factors are affecting the enterprise performance including maturation of the sales automation opportunity and challenges associated with growing from a large revenue base.

Susquehanna: Earnings Focus Taking A Back Seat

J. Derrick Wood of Susquehanna Financial Group commented in a note that his checks indicated Salesforce benefited from a "good deal" of contract renewals being consolidated into the fourth quarter, creating some artificial benefit to billings growth that will somewhat reverse in the first quarter.

Wood continued that Salesforce is nevertheless still expected to meet or beat estimates given the fact that further checks pointed to stable demand conditions.

However, Wood argued that shares are no longer trading on just fundamentals and shares are trading with a "partial take-out premium" that is not likely to abate in the near-term, even if M&A activity is dismissed on the post-earnings conference call.

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Jefferies: Survey Implies In-Line Quarter

John DiFucci and Brad Zelnick commented in a note that results from a survey conducted with 62 Salesforce partners led them to believe the company's enterprise business was "solid" relative to modest expectations. The survey also led the analysts to conclude a "healthy" mid-market transaction flow.

However, several respondents to the survey commented on some uncertainty created by recent M&A speculation which could impact their business. The analysts suggested that the M&A speculation could also hamper Salesforce's efforts in closing large strategic deals.

MKM Partners: Solid Quarter, But Not As Good As Q4

Kevin Buttigieg of MKM Partners commented in a note that he is expecting another "solid" quarter though less so than the previous quarter now that seasonality moves from a tailwind to a headwind.

Buttigieg noted that first quarter billings now account for 16 to 17 percent of annual billings, down from 18 to 20 percent in the prior years. In contrast, fourth quarter billings now account for about 40 percent of the annual total, up from 36 percent five years ago.

In addition, the analyst noted that continued M&A speculation will continue to provide a floor for shares, despite valuation appearing "a bit rich."

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Posted In: Analyst ColorPreviewsAnalyst RatingsTrading IdeasBrad Zelnicked calendarJ. Derrick WoodJefferiesJMP SecuritiesJohn DiFucciKevin ButtigiegMKM PartnersPatrick WalravensSteve KoeningSusquehannaWedbush
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