Barclays Raises Saleforce's Price Target To $89 Following Q1 Beat
Shares of salesforce.com, inc. (NYSE: CRM) rose 6 percent in Thursday's pre-market hours after the enterprise cloud computing company reported solid results. As a result, Barclays reiterating its Overweight rating and raised the price target on the stock by 1 percent to $89.
The target price of $89 implies an upside of 14 percent from Wednesday's close of $77.89.
Apart from the beat in EPS and revenue, Barclays said the 13 percent beat in billings is the main highlight of the results.
Salesforce.com's billings grew 31 percent to $1.632 billion, well ahead of consensus of $1.450 billion, as well as the company's own implied billings guidance. Deferred revenue also topped consensus and rose 32 percent to $4.007 billion.
"We believe that one of the most notable aspects of the company's recent performance has been the healthy growth achieved across multiple clouds, and the further reacceleration of the sales cloud was particularly impressive this quarter," analyst Raimo Lenschow wrote.
For the second quarter, salesforce.com sees revenue of about $2.005 billion to $2.015 billion, an increase of 23 percent year-over-year. The company expects non-GAAP diluted EPS of $0.24 to $0.25. The Street currently expects earnings of $0.25 a share on revenue of $1.98 billion.
Salesforce.com also raised FY17 revenue guidance to $8.16 billion to $8.20 billion, an increase of 22 to 23 percent from last year. Non-GAAP EPS is projected to be $1.00 to $1.02. The Street currently forecast earnings of $1.01 a share on revenue of $8.12 billion.
Lenschow said although "the implied margin guidance for the year translates to lower margins in the coming quarters," the analyst thinks this could be conservative. The analyst noted that the potential for margin expansion, billings growth and strong cash flow makes a strong investment case for salesforce.com.
"We believe Salesforce has ample runway to sustain its high growth trajectory given its combination of clouds that it continues to enhance through organic and inorganic innovation, which the company should also be able to augment with considerable improvement on the bottom line over the near-to-medium term," Lenschow added.
At time of writing, salesforce.com was up 4.22 percent at $81.16.
Latest Ratings for CRM
|Feb 2017||Needham||Initiates Coverage On||Hold|
|Jan 2017||Pivotal Research||Downgrades||Buy||Hold|
|Dec 2016||Drexel Hamilton||Initiates Coverage On||Buy|
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