Market Overview

Jefferies Upgrades Salesforce, But Sees Little Upside For Investors At Current Prices

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  • Shares of salesforce.com, inc. (NYSE: CRM) have declined 26.44 percent over the past three months, to a low of $54.05 on February 8.
  • Jefferies’ John DiFucci has upgraded the rating on the company to Hold, with a price target of $54.
  • The upgrade is based on the meaningful decline in the share price, improved traction at the company and continued robust mid-market performance.

Analyst John DiFucci believes that salesforce.com’s new subscription ACV is slowing, while the cost of growth is “egregious,” although the stock is fairly valued at present.

DiFucci also mentioned that discussions with industry field contacts suggest that the company’s enterprise business has improved over the past few quarters, with a strong performance in F4Q16, although difficult year-ago comp might dilute the growth.

“We attribute this performance to exceptional sales leadership and execution, which we have always identified as the biggest risk of being short the stock,” DiFucci said.

Jefferies’ partner survey, which comprised 85 responses to 15 questions, implies that the mid-market momentum is positive, with 87 percent of the surveyed partners meeting or exceeding salesforce.com’s business targets, as compared to 80 percent in the previous quarter.

In addition, 42 percent of the respondents said that the percentage of their business that was attributable to the company had been increasing.

According to the Jefferies report, “Surveyed partners indicated that CRM promotional activity heading into F4Q16 was similar to previous F4Qs.”

The company is scheduled to report its F4Q16 results on February 24. DiFucci expects salesforce.com to report 24 percent year on year increase in total revenues, in line with the consensus and the guidance.

Latest Ratings for CRM

DateFirmActionFromTo
Jan 2020MaintainsOverweight
Jan 2020MaintainsOverweight
Jan 2020MaintainsOutperform

View More Analyst Ratings for CRM
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Posted-In: Jefferies John DiFucciAnalyst Color News Upgrades Analyst Ratings Tech Trading Ideas

 

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