Salesforce's Sell-Side Earnings Roundup

Salesforce.com, inc. CRM reported modest earnings and revenue beats in the first quarter. Several Wall Street analysts have commented on the stock following the report.

Here’s a look at the key themes they discussed.

Large Deals

Salesforce’s Q1 deals with large clients such as Visa Inc V, Delta Air Lines, Inc. DAL and Amazon.com, Inc. AMZN were pleasant surprises, Jefferies analyst John DiFuccci said.

“CRM, saw continued strength in enterprise deals globally, including expansions,” DiFucci said.

Strong Billings

Q1 billings were up 16 percent compared to a year ago, well above consensus estimates of 7 percent growth.

“Billings and revenues came in ahead of consensus, with strong results across all geos and clouds,” BTIG analyst Joel Fishbein said.

Greater Visibility

After a number of M&A deals muddied the financial waters in 2016, salesforce delivered strong Q2 guidance and will deliver more predictable numbers in 2017 and beyond, Oppenheimer analyst Brian Schwartz said.

“F1Q results are a positive data point supporting our thesis that salesforce.com sets up as a cleaner story this year with M&A distractions and price changes behind, good new markets to penetrate in Commerce, Analytics, Collaboration, Government and increasing levels of FCF to support valuation,” Schwartz said.

Related Link: The Sell-Side View On Advanced Micro Devices' Analyst Day

Margins Down

While operating margins beat consensus Wall Street expectations on the quarter, they were still down slightly compared to a year ago.

“While we were impressed with total billings and revenue results, we would have liked to have seen more upside in operating margins in the April Q, which declined y/s,” BMO Capital Markets analyst Keith Bachman said.

Expensive Stock

Salesforce stock currently trades at a price-to-sales multiple of 6.1, ahead of the average 5.2 multiple of its peers.

“We believe the premium valuation is warranted given CRM’s dominant size, potential for sustained >20 percent organic revenue growth, industry leadership in next-generation technologies like cloud, and enterprise social collaboration, paired with string management execution,” Baird analyst Rob Oliver said.

While Wall Street remains mostly bullish on salesforce following its Q1 report, some firms are more bullish than others:

• Jefferies has a Hold rating and $80 price target.
• Oppenheimer has an Outperform rating and $100 price target.
• BTIG has a Buy rating and $100 price target.
• BMO has an Outperform rating and $100 target.
• Baird has an Outperform rating and $100 target.

Related Link: The Pros, The Cons And The Bottom Line In Salesforce's Q1 Earnings Report

________

Image Credit: By salesforce.com - salesforce.com, CC BY-SA 3.0, via Wikimedia Commons