Why Wall Street Cannot Get Enough of Salesforce

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While Salesforce.com Inc. (NYSE: CRM) managed to beat earnings expectations, the shares reacted negatively and the stock was lower on Thursday but picked up slightly on Friday. The shares might not have pulled back much, but the news seemed better on the surface. It turns out that investors and Wall Street analysts alike have treated Salesforce as if it’s all good times ahead.

24/7 Wall St. has included some highlights from the recent earnings report, as well as what analysts are saying about the stock after the fact.

The company said that it had $0.71 in earnings per share (EPS) and $3.28 billion in revenue. The consensus estimates had called for EPS of $0.47 and $3.23 billion in revenue, and in the same period of last year, the company said it had $0.33 in EPS on revenue of $2.56 billion.

During the most recent quarter, subscription and support revenues were $3.06 billion, an increase of 28% year over year. Professional services and other revenues were $221 million, an increase of 14% year over year.

Unearned revenue on the balance sheet as of July 31, 2018, was $5.88 billion, an increase of 24% year over year and 24% in constant currency.

Remaining performance obligation, representing future revenues that are under contract but have not yet been recognized, ended the second quarter at roughly $21 billion, an increase of 36% year over year.

Looking ahead to the fiscal third quarter, the company expects to see EPS in the range of $0.49 to $0.50 and revenue between $3.355 billion and $3.365 billion. Consensus estimates call for $0.54 in EPS and $3.35 billion in revenue.

Here’s what analysts had to say:

  • Argus reiterated a Buy rating and raised its price target to $181 from $141.
  • Macquarie reiterated an Outperform rating and raised its price target from $157 to $174.
  • Raymond James reiterated a Strong Buy rating and raised its target to $185 from $160.
  • UBS reiterated a Buy rating and raised its price target to $180 from $168.
  • Canaccord Genuity reiterated a Buy rating and raised its target to $165 from $150.
  • JMP Securities reiterated an Outperform rating and raised its target from $163 to $178.
  • KeyBanc reiterated an Overweight rating and raised its target price to $180 from $147.
  • BMO Capital reiterated an Outperform rating and raised its price target to $165 from $152.
  • Credit Suisse reiterated an Outperform rating and raised its price target from $155 to $170.
  • Barclays reiterated an Outperform rating and raised its price target to $165 from $150.
  • Morgan Stanley reiterated it as Overweight and raised its price target from $153 to $178.
  • Stifel reiterated a Buy rating and raised its price target to $175 from $160.

Shares of Salesforce traded at $153.30 on Friday, with a consensus analyst price target of $166.15 and a 52-week trading range of $92.11 to $154.97.