Buy salesforce.com (CRM) on Weakness Ahead of Next Week's Earnings - BofA/Merrill Lynch

BofA/Merrill Lynch analyst Kash Rangan reiterated a Buy rating and $73 price target on salesforce.com (NYSE: CRM) ahead of Q1 results on May 20th. The firm said use recent weakness as a buying opportunity. Rangan notes the key metric to watch is billings, for which CRM set a low bar.

The analyst also sees several $10 billion drivers ahead, including platform and enterprise. Also valuation is attractive per the firm's proprietary LTV framework. "At 5x CY15E EV/Revenues, CRM looks appealing on several counts; 1) Our proprietary LTV valuation framework (page 3) points to the relative attractiveness of CRM; 2) Leveraged to IoT (see Server & Enterprise Software: Cloud Wars Part VI: Internet of Things – Cloud meets Big Data 05 May 2014); 3) TAM of $30bn+ (sales, service, marketing and platform) should allow it to grow ~30% sustainably towards $10 bn in potential revenues; 4) Core adjusted cc billings growth could be closer to 30% (see pages 4-6); 5) Core organic revenue guidance for FY15E of ~25% could get revised higher by 100bps and potentially close out the year ~30%"

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 $53.43 yesterday.

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