What to Watch For in the Salesforce Q1 Report

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Salesforce.com Inc. (NYSE: CRM) will report its fiscal first-quarter financial results after the markets closed on Tuesday. Thomson Reuters consensus estimates call for $0.46 in earnings per share (EPS) on $2.94 billion in revenue. The same period of last year reportedly had EPS of $0.28 and $2.39 billion in revenue.

The company completed the biggest acquisition in its history earlier this month. Salesforce agreed to pay $6.5 billion in a cash and stock deal for business software company MuleSoft. MuleSoft went public in March 2017 and spent the year increasing sales while trying to manage its growing losses. In the company’s fourth quarter, it brought in $88.7 million in sales, which was a 60% bump from the previous year during the same period.

Following Salesforce’s most recent earnings report, Merrill Lynch reiterated a Buy rating and raised its price objective to $147. At the time the firm said this:

CRM is a long-term market share winner, with inflecting margins, benefiting from the structural shift to Cloud. We see multiple positive levers: 1) broader distribution. 2) lower attrition as enterprise ramps. 3) add-on/upgrade sales. 4) broadening addressable market into analytics/AI, verticals, IoT, commerce.

Since this report, Merrill Lynch has raised its price target again to $161. In this case, the firm noted solid bookings and margins, and strong earnings growth out to 2021 and 2022.

Excluding Tuesday’s move, Salesforce had outperformed the broad markets, with its stock up about 40% in the past 52 weeks. In just 2018 alone, the stock was up 25%.

A few analysts weighed in on Salesforce ahead of the earnings report:

  • Societe Generale has a Buy rating with a $135 price target.
  • JMP Securities has an Outperform rating with a $140 target.
  • Credit Suisse has an Outperform rating and a $150 price target.
  • Sanford Bernstein has a Market Perform rating.

Shares of Salesforce were last seen down about 1% at $126.95, with a consensus analyst price target of $139.22 and a 52-week trading range of $83.55 to $131.00.