Barclays Remains A Buyer Of Salesforce Ahead Of Q3 Earnings

Salesforce.com, inc. (NYSE: CRM) is scheduled to report its Q3 results on November 17. The company will likely “outperform its Q3 guidance for billings, making for more reasonable billings in Q4,” Barclays’ Raimo Lenschow said in a report. He reiterated an Overweight rating on the company, with a price target of $89.

Analyst Lenschow recommended investors to look at “performance on a half-year level, which puts CRM in-line with historical averages.”

Billings

Management indicated the Q2 weakness in billings was primarily due to softness in the United States and foreign currency exposure. “So far, Q3 data points from the US do not seem to support this,” Lenschow noted. He added that the billings weakness appears temporary, with the half-year performance being in-line with past performance; therefore, investors should not be too worried.

VAR Survey Results

“Our VAR survey for this reporting period shows results that are consistent with recent growth trends. The Sales Cloud seems to be maturing but both the Services Cloud and the Platform business continue to see more interest,” the analyst wrote.

While Marketing Cloud interest declined and the survey results for Analytics Cloud are not too encouraging, given their relative size, investors should not be overly concerned, Lenschow added.

In a report published on November 8, Morgan Stanley's Keith Weiss mentioned that the current valuation of the company's stock represented a compelling buying opportunity.

At last check, salesforce was up 1.26 percent at $74.56.