UBS Reiterates Buy on salesforce.com (CRM) Following 2Q Report
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UBS reiterated a Buy rating and $100.00 price target on salesforce.com (NYSE: CRM) following the company's 2Q earnings report. CRM raised 2017 revenue guidance to $8.275-8.325Bn vs. prior guidance of $8.26-8.32Bn. UBS adjusted 2017 revenue estimates to $8,325 from 8,269M.
Analyst Brent Thill commented, "After 2 monster qtrs. in Q4 & Q1, a mixed FQ2 was a small shock to everyone. 2 factors were at play, and we think both are transitory and will be overcome. 1) FX headwinds increased, but FY17 was still raised on a strong deal pipeline. 2) U.S. was soft late in Q2, and some deals slipped though were not lost; mgmt already made adjustments and Q3 guide embeds some conservatism in our view. With stock down 7% in AH (to $74.05), we believe it creates a good entry point for LT investors for these reasons: 1) EV/S multiples of 5.7x NTM & 5.2x CY17 are merely avg for the SaaS comp group despite above avg characteristics; 2) EV/S is below 10-yr historical avg of 6.0x; 3) back in late 2014, stock was volatile when F3Q15 billings missed due to FX but stock closed up 20% in 3 mos after a strong F4Q15; 4) Q2 is seasonally slow; Q4 still looks set up for a strong finish; 5) We think bear argument of M&A hiding problems in core bus is unfounded, and timing is mere coincidence. Maintain Buy on this LT secular winner."
Shares of salesforce.com closed at $79.42 yesterday.
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