Market Overview

KeyBanc Finds A Surprise In Salesforce's Q3

Share:
KeyBanc Finds A Surprise In Salesforce's Q3

Salesforce.com, inc. (NYSE: CRM) reported on Tuesday a top- and bottom-line beat in the third quarter but guided its fourth quarter EPS below Wall Street's expectations.

The Analyst

KeyBanc Capital Markets' Brent Bracelin maintains an Overweight rating on Salesforce's stock with a price target raised from $108 to $124.

The Thesis

Salesforce reported another "solid" quarter highlighted by 25 percent revenue growth and 59 percent EPS growth, Bracelin said in a research report. (See Bracelin's track record here.) 

But the biggest takeaway from the quarter is a surprise acceleration in billed and unbilled deferred revenue, which rose 31 percent from a year ago to $15.9 billion, the analyst said. The growth rate is the strongest seen in three years and marks the second consecutive quarter of accelerating growth, he said.

Some of the other notable points Bracelin identified in Salesforce's Q3 were:

Sales cloud growth of 17 percent in the quarter versus 12 percent in the full fiscal year. 

Acceleration in service cloud and app cloud growth. 

The operating margin moved higher by 140 basis points from the past quarter to 16.3 percent.

Salesforce's growth across metrics could be seen as evidence the company is  "capitalizing on its potential to become the modern digital platform for large B2B and B2C enterprises," the analyst said. This should also leave investors with a high degree of confidence that Salesforce could double its revenue to $20 billion within five years.

Price Action

Shares of Salesforce hit a new all-time high of $109.19 but were trading lower by around 1 percent early Wednesday morning.

Related Links:

Salesforce Falls Despite Q3 Beat

8 Stocks To Watch For November 22, 2017

Photo courtesy of Salesforce. 

Latest Ratings for CRM

DateFirmActionFromTo
Dec 2019MaintainsOverweight
Dec 2019MaintainsOutperform
Nov 2019MaintainsOutperform

View More Analyst Ratings for CRM
View the Latest Analyst Ratings

Posted-In: Brent Bracelin cloudAnalyst Color Price Target Reiteration Top Stories Analyst Ratings Tech Best of Benzinga

 

Related Articles (CRM)

View Comments and Join the Discussion!

Latest Ratings

StockFirmActionPT
INFYBank of AmericaUpgrades
BRMKPrescience PointInitiates Coverage On15.3
KALVNeedhamMaintains28.0
DENNSunTrust Robinson HumphreyInitiates Coverage On21.0
DINSunTrust Robinson HumphreyInitiates Coverage On111.0
View the Latest Analytics Ratings
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Premarket Activity
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Daily Analyst Rating
A summary of each day’s top rating changes from sell-side analysts on the street.
Fintech Focus
A daily collection of all things fintech, interesting developments and market updates.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at vipaccounts@benzinga.com

Fast Money Picks For November 22

Technician: Micron Could Rally Another 25%