's (CRM) Q2 Miss Seen as "Perplexing' - Deutsche Bank

September 1, 2016 8:27 AM EDT
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Price: $75.13 +0.52%

Rating Summary:
    50 Buy, 8 Hold, 1 Sell

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    Up: 30 | Down: 50 | New: 20
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Deutsche Bank maintained a Buy rating on (NYSE: CRM) but trimmed its price target to $90.00 (from $95.00). The change follows weak Q2 results. Analyst Karl Keirstead said soft results were puzzling.

"The miss is perplexing, as we haven't picked up strong evidence of an end-of July slowdown from other tech firms and haven't heard of any material internal sales structure changes," said Keirstead.

The analyst added, "It also came suddenly (results were strong the last few quarters), suggesting that more secular and slow-to-play-out issues such as high market penetration are probably not the culprit. Also, the unbilled backlog growth (24% ex-DWRE) was normal, indicating no unusual change in bookings momentum. Absent a good explanation and knowing that Salesforce has overcome air pockets in the past, we're not panicking. However, we're lowering our FY17 billings growth estimate from 26% to 22%."

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Shares of closed at $79.42 yesterday.

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