Given salesforce.com, inc. CRM’s large market opportunity, continued market share gains across product lines, cross-sell and up-sell opportunities of new offerings, and a boost in operating leverage, Credit Suisse perceives significant potential to boost operating cash flow in the next few years.
Salesforce saw a sharp after-hours sell-off even as it posted strong second-quarter results Tuesday with slim beats in sales, billings and earnings per share.
Credit Suisse attributed the 3.5-percent plunge to disappointment in management’s steady full-year guidance for margin improvement. Salesforce maintained its projections between 125 and 150 basis points.
However, the analysts expect investors to “begrudgingly” look past the stagnant outlook considering the firm’s outperformance in bookings. The measure, when combined with Salesforce’s deferred revenue guide, puts the firm on pace to meet Credit Suisse’s third-quarter estimates.
Apart from this assessment, the research firm was encouraged by 17.4-percent year-over-year growth in cloud sales revenue, which indicated acceleration even against last year’s strong international growth.
In spite of the risk of increased competition, Credit Suisse raised its full-year estimates for revenue from $10.285 billion to $10.384 billion and EPS from $1.30 to $1.31.
The analysts maintained an Outperform rating on the stock and raised their price target from $110 to $115.
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