'No Surprises' Expected On Salesforce Earnings Call: Here's Why

• salesforce.com, inc. CRM shares have been volatile over the last six months, and have appreciated 8 percent since May 11.
• Barclays’ Raimo Lenschow maintained an Overweight rating on the company, while raising the price target from $80 to $87.
• The company’s 3Q results are likely to be in-line with expectations, exhibiting consistency, Lenschow mentioned.

Salesforce is scheduled to report its 3Q earnings on November 18. There are unlikely to be any meaningful surprises from earnings, although the stock represents a core long-term holding in software, analyst Raimo Lenschow said.

“We came away from Dreamforce this year more positive, given the companies still expanding product portfolio, increasing focus on vertical markets, and positive commentary around Wave Analytics,” Lenschow wrote.

There is greater focus on improving margins and the company’s operating margin has been healthy. Lenschow pointed out that although leverage in S&M expense has been slow and steady so far, more leverage remains and improvements could be more consistent.

“Salesforce has achieved significant scale but profitability improvements will, in our view, capture investor enthusiasm even more as the company matures, especially as OCF growth continues to accelerate and lower CapEx drops directly down to enhance FCF margins,” the Barclays report noted.

Salesforce has a healthy competitive positioning, is achieving improved leverage and is continually enhancing its product portfolio. The price target has been raised as the base has been rolled forward to 2017 estimates.