Needham & Company Keeps Buy Rating on salesforce (CRM); Results 'Unspectacularly Solid'

May 24, 2013 9:52 AM EDT
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Despite heavy selling pressure in (NYSE: CRM), following Q1 results, Needham & Company analyst Michael Huang is sticking with his Buy rating and $50 price target, calling the results - "unspectacularly solid."

Huang weighted in, "Salesforce delivered a solid but unspectacular bookings quarter (up 17% y/y vs. up 28% y/y in 4Q vs. up 31% y/y in 3Q), which reflects a tough compare (Q1 last yr included a mega large deal that renewed in 4Q13 as opposed to in Q1), FX headwinds (Japanese yen devalued 10% since Feb 2013), and term length headwinds (reduced benefit from shift to annual billings). Normalizing for these headwinds, billings growth could have been 15 points higher (roughly 30% y/y growth), which is impressive especially when factoring in the company's scale (roughly $3.5 billion in annualized revenue)."

He added, "Importantly, we don't detect any meaningful deterioration of sales cycles or close rates across geographies due to macro pressures or to a constrained IT spending environment, which suggests the strength of competitive positioning, the strength of the SaaS secular, the numerous product cycles, and the magnitude of opportunity ahead. We continue to believe that salesforce is the highest quality and best scaled SaaS name in our universe with numerous product cycles leveraged to the rising strategic importance of SaaS."

The firm trimmed FY2014 EPS from $0.49 to $0.48 and FY2015 from $0.69 to $0.68.

For an analyst ratings summary and ratings history on click here. For more ratings news on click here.

Shares of closed at $45.69 yesterday.

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