Citi Downgrades salesforce.com (CRM) to Hold; Lowers Estimates

May 22, 2009 9:58 AM EDT

Citi downgrades salesforce.com inc (NYSE: CRM) from Buy to Hold. Price target raised $2 to $37.

Citi analyst says, "CRM posted disappointing def. revenue growth of 17% vs. our 22% est. Overall pipeline remains healthy, but lower conversion rates, smaller deal sizes, and lower add-on installed base sales resulted in a FQ1 bookings shortfall and lower FY10 rev guidance. Overall on/off balance sheet def. rev remained ~flat q/q at $1.3Bn despite a 50% y/y increase in net new clients signed during the qtr (3,900 new clients vs. 2,600 last yr) - ASPs were clearly under pressure. It is surprising to see such low conversion rates considering overall headcount expanded by 26% y/y, suggesting the overall macro slowdown has finally caught up with CRM. While we believe the positive L-T thesis is intact for CRM's leading on-demand offering, stock will likely be under pressure until these negative trends abate."

"Estimate Changes - Revs: FY10 to $1.26Bn  (+17%  y/y) from $1.32Bn (+22%); FY11 to/from $1.45Bn(+15%)/$1.59Bn(+21%); FY12 to/from $1.70Bn(+17%) / $1.87Bn(+18%). Gaap EPS to/from: FY10 $0.60/0.56, FY11 $0.81/0.85, FY12 $1.17/1.15."

To see more analyst ratings on CRM Click Here.

Salesforce.com, inc. is a provider of software on demand. The Company provides customer relationship management (CRM) service to businesses of all sizes and industries worldwide.

Related Categories

Downgrades

Stocks Mentioned

Related Entities

• Citi

Add Your Comment

Name

Subject

Body

Verification can't see the text?
click here to refresh the image.
what's this?