Q2 Preview: salesforce.com (CRM) Has Momentum On its Side

August 23, 2012 11:18 AM EDT
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Price: $75.78 --0%

Rating Summary:
    51 Buy, 7 Hold, 1 Sell

Rating Trend: = Flat

Today's Overall Ratings:
    Up: 23 | Down: 31 | New: 34
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Shares of salesforce.com (NYSE: CRM) are choppy going into tonight's 2Q Fiscal 2013 earnings report. Revenue is expected to grow 33 percent to $728.32 million and analysts are calling for a 15 percent increase in EPS to $0.39 compared to July of last year, when the company reported adjusted earnings of $0.34. Since then the stock has gained just over 32 percent. Despite the gains, trading has been fairly volatile with a 52 week range of $94.09-164.75.

Data from Streetinsider.com's ratings insider has 25 analysts with a Buy rating on salesforce.com, 3 have neutral rating, and 2 rate the company a sell. The average price target is 171.50, with a range of $116 to $ 215.

Analyst Comments:

  • "The shares have been under pressure the last 90 days for a variety of reasons related to Buddy Media dilution, competition from Oracle and Google, along with ongoing questions about tough comparables due to the shift in annual invoicing," said Jason Maynard of Wells Fargo earlier this month. "While those are all legitimate issues, we think the bigger picture story is that SFDC has a broader product lineup than ever and a vast untapped market ready for the shift to cloud."

    For FQ2, Wells Fargo is projecting revenue of $726M, in the middle of the guidance range, and calculated billings growth of 29% y/y to $730 million. Revenue estimate reflects subscription revenue of $681 million, and services revenue of $45 million.

    "The company may not have a huge quarter of large deals, however business remained steady over the quarter. In the same period a year ago, the company signed more than 60 seven figure deals and 3 eight figure deals. We assume North America (~70% of revenue) performed slightly better, EMEA (~18% of revenue) was just so-so, and Asia (~13% of revenue) performed about as expected. With that backdrop, we think that SFDC could hit the high end of its revenue range, which would be upside to our estimate. We think that billings growth of 30% is also possible."

  • Goldman is modeling revenue and non-GAAP EPS of $727 mn and $0.39, in line with consensus and compared to guidance of $724-$728 mn and $0.38-$0.39. On deferreds, analyst Heather Bellini said “despite the macro backdrop in EMEA and a greater than expected F/X headwind, we expect deferreds to be in line with our view of $1.34bn, flat qoq and up 43% yoy, essentially in line with consensus.”

    “We are modeling July cash from operations of $113 mn, down 47% qoq and up 36% yoy, compared to consensus of $120 mn, with our view that slight upside is possible,” she added.

    Looking forward, Goldman anticipates accelerating bookings growth into CY13.

Stay tuned to StreetInsider.com's EPS Insider section to see our analysis of the highly-anticipated quarterly results within seconds of their release. You can also check out salesforce.com's earnings history here.

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Analyst Comments, Analyst EPS View

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