salesforce.com (CRM) Reiterating Buy After DWRE Acquisition - UBS

UBS analyst, Brent Thill, reiterated his Buy rating on shares of salesforce.com (NYSE: CRM).

With the DWRE acquisition effectively closed on 7/11, the analyst published his updated model (pro forma revenue build-up inside). DWRE is CRM's largest acquisition ever and the co is relatively small with revs <5% of CRM, thus he only made modest revisions.

Revs increase slightly: FY17 by mid-pt of guidance, FY18-19 use a 10% haircut to prior First Call consensus for DWRE, and FY20-21 assume 20% growth; all periods are significantly below mgmt. internal ests published in the tender statement. He also haircut prior stand-alone CRM ests by ~1% for potential headwinds from the UK referendum. The net effect to FY17 rev is to go from slightly above prior guidance to now twd low-end of new range.

FY17 non-GAAP EPS is cut ~8%, but keep in mind this includes ~$30M in merger & integration costs. He assume another 2 cent dilution in FY18, then accretion from FY19 on.

PT is unchanged at $100. Strategically, the analyst believes DWRE fills a large hole in CRM's customer-facing product portfolio. He envisions a seamlessly integrated CRM + eCommerce suite will prove to be a compelling & powerful value proposition to enterprises looking to replatform for the new digital world.

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 $81.33 yesterday.

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