Q4 Preview: Salesforce.com (CRM) Shares Looking Strong Into Report, But How Much Upside is Left?

Shares of Salesforce.com (NYSE: CRM) are outperforming the US's three major averages Thursday afternoon ahead of the company's fourth-quarter results. The report is expected out after the close this afternoon. While the S&P 500 is up 0.3 percent, Salesforce shares are up 2 percent.

The Street is currently anticipating Salesforce to report quarterly earnings of 40 cents per share on sales of $624.03 million. During the same quarter in 2010, Salesforce posted EPS of 8 cents on sales of $456.87 million. The company reported a loss of 3 cents per share on sales of $584.26 million last quarter.

After falling about 14 percent during December, Salesforce.com shares are up about 29 percent so far in 2012.

The stock currently trades at a very lofty 80 times FY13 EPS estimate of $1.62. Elsewhere in the enterprise cloud and CRM sector, SAP trades at just 18.9 times next year's earnings while Netsuite (NYSE: N) trades at 138 times 2013 earnings estimates.

32 analyst firms rate Salesforce shares a Buy, six rate the stock a Hold, and four rate the stock a Sell.

Analyst Commentary:

• Goldman Sachs - Looking for sales of $623 million and EPS of 40 cents. The firm said its checks suggest upside to the sales figure and "in the all-important deferred metric." Sees deferreds up 30 percent year over year to $1.21 billion, books up 32 percent from last year to $917 million and cash from operations of $192 million.
  
  Reiterated a Buy rating and $150 price target.
  
  
• Wells Fargo - Expecting EPS of 39 cents, reduced FY13 EPS estimate from $1.70 to $1.60. Wells Fargo is "firmly in the bullish camp..." Believes Salesforce is "one of only a few firms that can sustain 25%-30% topline growth despite pushing $3 billin in revenue." Said the "three most important bid ideas support growth are: 1) social is remaking customer and employee expectations and new engagement apps like Radian6 and Chatter are required, 2) SFDC is gradually becoming the de facto system of record for all things customer and has a huge opportunity to grow the Service Cloud and pull through sales products, and 3) there is a bevy of untapped opportunities (PaaS, Europe, data etc.) to mine."
  
  Maintains Outperform rating and $165-$170 valuation range.

Salesforce will host its quarterly conference call at 5pm ET. A live web broadcast of the event will be available on the salesforce.com Investor Relations website at http://www.salesforce.com/investor. A live dial-in is available domestically at 866-901-SFDC or 866-901-7332 and internationally at 706-902-1764. A replay will be available at (800) 642-1687 or (706) 645-9291, passcode 48589774, until midnight (ET) March 23, 2012.

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