Market Overview

Morgan Stanley Projects A Strong Q4 At Salesforce

Share:
Morgan Stanley Projects A Strong Q4 At Salesforce
Related CRM
Jim Cramer Weighs In On Dropbox, Teva And More
Coupa Unveils New Partnership, Platform For 'Smarter Spending'
Housing Market Index Craters (TalkMarkets)

Cloud computing name salesforce.com, inc. (NYSE: CRM) is likely to report strong fourth-quarter results with sustained demand trickling into its fiscal 2019, according to Morgan Stanley. 

The company is scheduled to report after the market close Feb. 28.

The Analyst

Analyst Keith Weiss reiterated an Overweight on Salesforce.com shares with a $134 price target, representing about 23-percent upside from current levels.

The Thesis

Data points highlighted by Salesforce.com's partners suggest the company is well-positioned to sustain 20-percent-plus billings growth in the fourth quarter and into 2019, Weiss said in a Thursday note. Salesforce may be operating in a more muted competitive environment relative to last year, the analyst said.

Marketing cloud is Salesforce's most notable positive, given the traction the segment gained due to recent product improvements and better integration with sales and service, Weiss said. 

The segment's organic revenue growth accelerated from a low-20 percent trough in the fourth quarter of 2017 to 36 percent in the second quarter of 2018 and 40 percent in the third, the analyst said. The core sales cloud segment was also gaining traction, thanks to a strong focus on strategic verticals and integration of CPQ functionality, he said. 

"Proving out the viability of management's $22-billion fiscal 2022 revenue goal (and the associated 20-percent topline CAGR) could be the X-factor in moving shares higher," Morgan Stanley said. The firm projects a 35-percent operating margin as revenue growth slows to 10 percent.

Salesforce's Q4 billings guidance midpoint of 16-percent year-over-year growth is conservative, and Morgan Stanley is modeling for 17 percent growth, slightly below the consensus estimate of 17.6 percent, Weiss said. 

The Price Action

Salesforce.com shares are up about 38 percent over the past year.

The stock was up 2.89 percent at $112.20 in Thursday morning trading. 

Related Links:

5 Reasons Why KeyBanc Upgraded Paycom

Sell-Side: ADT A Secure Investment

Photo courtesy of Salesforce. 

Latest Ratings for CRM

DateFirmActionFromTo
Oct 2018NomuraInitiates Coverage OnBuy
Sep 2018BairdMaintainsOutperformOutperform
Sep 2018Deutsche BankMaintainsBuyBuy

View More Analyst Ratings for CRM
View the Latest Analyst Ratings

Posted-In: cloudAnalyst Color Price Target Previews Reiteration Top Stories Analyst Ratings Trading Ideas Best of Benzinga

 

Related Articles (CRM)

View Comments and Join the Discussion!

Latest Ratings

StockFirmActionPT
XECImperial CapitalDowngrades35.0
SSTIImperial CapitalUpgrades49.0
AVDLoop CapitalUpgrades29.0
FCREYDeutsche BankUpgrades0.0
OECUBSUpgrades34.0
View the Latest Analytics Ratings
Don't Miss Out!
Join Our Newsletter
Subscribe to:
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
Your weekly roundup of hot topics in the exciting world of fintech.
Thank You
for registering for Benzinga’s newsletters and alerts.
• The Daily Analysts Ratings email will be received daily between 7am and 10am.
• The Market in 5 Minutes email will be received daily between 7am and 8am.
• The Fintech Focus email will be received every Friday between 2pm and 5pm.

SPX Q4 Earnings Preview

Yamana Gold Q4 Earnings Preview