Q3 Preview: Salesforce.com (CRM) Historically Beats Q3 Views by 2%, Shaping Up for the Same This Quarter
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Price: $209.17 +1.82%
Overall Analyst Rating:
SELL (= Flat)
Dividend Yield: 1%
Revenue Growth %: +11.1%
Overall Analyst Rating:
SELL (= Flat)
Dividend Yield: 1%
Revenue Growth %: +11.1%
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Salesforce.com, Inc. (NYSE: CRM) is higher today ahead of the company's third quarter earnings release, expected out after the market closes today. The stock is up 4.7% in afternoon trading.
CRM is expected to report an EPS of $0.31 on revs of $410.46 million. Last quarter, the San Francisco, CA-based company reported an EPS of $0.29 and revs of $394.4 million, besting estimates calling for an EPS of $0.27 on revs of $384.69 million. For the same period in 2009, CRM had an EPS of $0.16 with revs of $330.5 million, just about in-line with consensus revs of $324.2 million and an EPS of $0.16.
Shares gained 13.9% through the quarter to $116.07 at the end of October. The shares are 1.5% lower since the end of the quarter, and up 54% on the year.
A simple valuation puts CRM at 75.8x next year's earnings estimates.
Data from Bloomberg shows that 20 analysts have a Buy rating on the shares, 15 have a Hold, and one recommends to Sell the stock. The analysts price target average is $116, with a high of $130 and a low of $80.
Analysts Through the Quarter
In August, Goldman Sachs increased their price target on the shares from $100 to $110, while maintaining a Buy rating on the shares (they lifted their price target to $117 later in August, and to $128 in September).
Credit Agricole downgraded from Outperform to Underperform, with a price target boosted from $87 to $109.
Janney lifted their price target from $107 to $112, reiterating their Buy rating on the stock.
Wells Fargo resumed coverage with a Market Perform rating and valuation range of $95 - $100.
September had UBS increase their price target from $115 to $135, maintaining a Buy rating.
Piper Jaffray downgraded the shares from Overweight to Neutral, with a price target of $115. The firm upgraded shares to Overweight in October.
Canaccord Genuity initiated with a Hold.
In October, Evercore started shares with an Overweight and BMO Capital initiated with an Outperform rating an $130 price target.
Summary
Salesforce guided a Q311 EPS of $0.30 - $0.31 with revs of $408 - $410 million.
Goldman Sachs sees the company gaining traction "beyond its core salesforce automation offering, especially Service Cloud and now Chatter." They also note two other key points: 1) transactions on the company's platform grew 14% sequentially and 54% from Q310, and 2) recent SMB data points have suggested a level of cautious optimism with the NFIB index improving for two consecutive months.
Wedbush is expecting an EPS of $0.31 and revs of $413.2 million. Wedbush notes that CRM generally beats Q3 views by 2%, slightly lower than their annual average of a 2.6% win. Wedbush expects billings to grow 28%, versus the consensus of 26%. The weaker U.S. dollar should also add $9 - $14 million of deferred revs for CRM, considering that 30% of their business is international and the dollar has seen about 7% of weakness since July. Wedbush has an Outperform with a $120 price target on the shares.
Salesforce.com, Inc. is expected to release their Q311 earnings on Thursday, November 18, 2010, at approximately 4:00pm EST. Stay tuned to StreetInsider.com's EPS Central section to see our analysis of the highly-anticipated quarterly results within seconds of their release.
CRM is expected to report an EPS of $0.31 on revs of $410.46 million. Last quarter, the San Francisco, CA-based company reported an EPS of $0.29 and revs of $394.4 million, besting estimates calling for an EPS of $0.27 on revs of $384.69 million. For the same period in 2009, CRM had an EPS of $0.16 with revs of $330.5 million, just about in-line with consensus revs of $324.2 million and an EPS of $0.16.
Shares gained 13.9% through the quarter to $116.07 at the end of October. The shares are 1.5% lower since the end of the quarter, and up 54% on the year.
A simple valuation puts CRM at 75.8x next year's earnings estimates.
Data from Bloomberg shows that 20 analysts have a Buy rating on the shares, 15 have a Hold, and one recommends to Sell the stock. The analysts price target average is $116, with a high of $130 and a low of $80.
Analysts Through the Quarter
In August, Goldman Sachs increased their price target on the shares from $100 to $110, while maintaining a Buy rating on the shares (they lifted their price target to $117 later in August, and to $128 in September).
Credit Agricole downgraded from Outperform to Underperform, with a price target boosted from $87 to $109.
Janney lifted their price target from $107 to $112, reiterating their Buy rating on the stock.
Wells Fargo resumed coverage with a Market Perform rating and valuation range of $95 - $100.
September had UBS increase their price target from $115 to $135, maintaining a Buy rating.
Piper Jaffray downgraded the shares from Overweight to Neutral, with a price target of $115. The firm upgraded shares to Overweight in October.
Canaccord Genuity initiated with a Hold.
In October, Evercore started shares with an Overweight and BMO Capital initiated with an Outperform rating an $130 price target.
Summary
Salesforce guided a Q311 EPS of $0.30 - $0.31 with revs of $408 - $410 million.
Goldman Sachs sees the company gaining traction "beyond its core salesforce automation offering, especially Service Cloud and now Chatter." They also note two other key points: 1) transactions on the company's platform grew 14% sequentially and 54% from Q310, and 2) recent SMB data points have suggested a level of cautious optimism with the NFIB index improving for two consecutive months.
Wedbush is expecting an EPS of $0.31 and revs of $413.2 million. Wedbush notes that CRM generally beats Q3 views by 2%, slightly lower than their annual average of a 2.6% win. Wedbush expects billings to grow 28%, versus the consensus of 26%. The weaker U.S. dollar should also add $9 - $14 million of deferred revs for CRM, considering that 30% of their business is international and the dollar has seen about 7% of weakness since July. Wedbush has an Outperform with a $120 price target on the shares.
Salesforce.com, Inc. is expected to release their Q311 earnings on Thursday, November 18, 2010, at approximately 4:00pm EST. Stay tuned to StreetInsider.com's EPS Central section to see our analysis of the highly-anticipated quarterly results within seconds of their release.
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