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Analysts Back Up Positive Market Reaction To Salesforce's Q1 Earnings

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Analysts Back Up Positive Market Reaction To Salesforce's Q1 Earnings

Salesforce.com, Inc. (NYSE: CRM) stock jumped 2.4 percent on Wednesday morning after the company reported earnings and revenue numbers that topped Wall Street expectations.

Several analysts have weighed in on the stock following the report. Here’s a sampling of what they had to say.

Clean Quarter

Stifel analyst Tom Roderick said the first quarter was full of clean numbers that leave very few holes for naysayers to target.

“The company signed the largest deal in company history with a major insurance company, while all key Clouds grew at a similar or faster pace as compared to what the company generated in FY18,” Roderick wrote.

William Blair analyst Bhavan Suri said investors shouldn’t overlook how strong the quarter was across the board.

“While we believe the core service cloud offering continues to grow nicely, we also think Field Service Lightning (which we estimate could reach $100 million revenue this year and is growing close to 100%) and Customer Portal (which we estimate will reach $250 million revenue this year and is growing over 40%) are doing well and contributing to service cloud growth,” Suri wrote.

Gaining Momentum

Wedbush analyst Steve Koenig said Salesforce’s momentum isn’t just a seasonal phenomenon.

“We expect the demand environment and the company’s market position will enable Salesforce to sustain the strong beat-and-raise pattern we’ve been seeing,” Koenig said.

SunTrust analyst Terry Tillman said not even the massive MuleSoft acquisition could slow down Salesforce’s momentum.

“The company has executed by far its largest acquisition in history and is still able to achieve in line to slightly higher operating margins compared to the prior year,” Tillman wrote.

Massive Opportunity

Morgan Stanley analyst Keith Weiss said Salesforce is building a strong case that the company has a massive long-term growth opportunity ahead.

“Management confidence in Salesforce.com's ability to benefit from a rising tide of digital transformations was expressed in their estimate of a $120 billion market opportunity and punctuated by the signing of the largest deal in company history,” Weiss wrote.

KeyBanc analyst Brent Bracelin said Salesforce’s strong performance at such a large scale demonstrates that it's a key enabler of the digital transformation of the business world.

“We remain bullish on CRM as one of the top cloud platforms to own based our view that these platforms are hitting escape velocity as cloud adoption goes mainstream in the enterprise,” he wrote.

Ratings And Targets

  • Morgan Stanley has an Overweight rating and $153 target.
  • KeyBanc has an Overweight rating and $147 target.
  • Stifel has a Buy rating and $150 target.
  • William Blair has an Outperform rating.
  • Wedbush has an Outperform rating and $150 target.
  • SunTrust has a Buy rating and a $146 target.

The stock traded around $129 at time of publication, up 1.7 percent.

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Morgan Stanley: What To Like In Salesforce's Q1

Image credit: Dion Hinchcliffe, Flickr

Latest Ratings for CRM

DateFirmActionFromTo
Jul 2020Piper SandlerMaintainsOverweight
Jun 2020Goldman SachsMaintainsBuy
Jun 2020JefferiesMaintainsBuy

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