Apps & Software

Is Now Too Frothy? (CRM)

Jon C. Ogg Inc. (NYSE: CRM) is on fire after earnings, with shares hitting all-time highs and many analysts raising targets and/or estimates.  What we wanted to see is if the frothy valuations will get in the way after the dust settles from today’s huge gains.

The software provider reported earnings of $21.1 million, or $0.15 EPS and revenue gained by 30% to right at $429 million.  The more important non-GAAP earnings $0.32 EPS.  Estimates were roughly $0.31 EPS and $410 million in revenues. The company’s outlook is $0.27 to $0.28 EPS with revenues of $447 to $449 million versus estimates of $0.28 EPS and $424.8 million in revenues.

While many of the actual research calls are still not screaming buys, we wanted to make note of some key price changes we have seen:

  • Canaccord raised price target to $110 from $105;
  • Citigroup raised price target to $124 from $98;
  • FBR raised price target to $110 from $85;
  • Jefferies raised target to $130 from $120;
  • JMP Securities raised price target to $145 a share from $120;
  • RBC Capital Markets raised price target to $150 a share from $125;
  • Wedbush Morgan raised price target to  $135 from $120.

Suddenly the average price target is now closer to $140 from about $120 before earnings.  Today on CNBC, Jim Cramer argued it was misunderstood and that funds paying up $18 or $19 after earnings are likely willing to pay up to $30 the following week.

Shares are up over $19.00 at $134.82 shortly before the close.  So far analysts are playing catch up.  The problem here is that many ratings have remained cautious with Hold and ‘Market Perform’ ratings despite the rise today and since the last report.