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Salesforce (CRM) CL-Buy Rating Reiterated at Goldman Sachs

August 22, 2014 7:27 AM EDT
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Price: $300.51 +2.10%

Rating Summary:
    46 Buy, 18 Hold, 2 Sell

Rating Trend: Up Up

Today's Overall Ratings:
    Up: 20 | Down: 14 | New: 22
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Goldman Sachs maintained a Conviction Buy rating on salesforce.com (NYSE: CRM) with a price target of $74. Comments follow Q2 results. Analyst Heather Bellini noted potential for acceleration in organic growth.

"As expected, key metrics showed slight upside versus expectations. Revenue of $1.32bn (+38% yoy, 7.5% qoq) beat consensus estimates by $29mn, while non-GAAP EPS of $0.13 was a penny better than the Street. Bookings of $1.35bn (+33% yoy) also beat consensus by $47mn, with deferred revenue of $2.35bn beating consensus by $23mn. F3Q15 guidance suggests consensus revenue and EPS will stay roughly the same, with revenue at $1.365-$1.370bn (+27% yoy and +4% qoq at the midpoint) and non-GAAP EPS of $0.12-0.13 versus consensus prior to the print of $1.37bn and $0.13. We estimate guide implies non-GAAP operating margins of ~9.5-10.5% vs. consensus at 10.2%, and bookings growth of +25% yoy versus the Street at +28%," said Bellini.

"We believe CRM continues to be the preeminent SaaS vendor with significant runway ahead, as CRM’s core business had healthy sequential growth rates despite concerns into the print, as sales and service cloud grew 5.8% and 8.1% qoq vs. CRM’s 3yr F2Q subscription growth average of 6.6% qoq," she added. "We estimate F2Q15 organic billings growth was 23% yoy versus our estimated range of 24-27% organic growth in F1Q15. The midpoint of reported F3Q15 guidance implies 25% billings growth, implying acceleration in organic growth next quarter. Additionally, vertical focus will help drive increased penetration of accounts, making it a more strategic vendor to its customers."

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

Shares of salesforce.com closed at $55.71 yesterday.



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