What to Expect When Salesforce Reports After the Close

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Salesforce.com Inc. (NYSE: CRM) is scheduled to release its fiscal second-quarter financial results after the markets close on Thursday. The consensus estimates are calling for $0.47 in earnings per share (EPS) and $3.95 billion in revenue. The same period of last year reportedly had $0.71 in EPS and $3.28 billion in revenue.

Earlier this quarter, Salesforce announced that it would acquire Tableau Software in an all-stock transaction. The boards of directors of both companies have approved the transaction.

Under the terms, each share of Tableau Class A and Class B common stock will be exchanged for 1.103 shares of Salesforce common stock, representing an enterprise value of roughly $15.7 billion (net of cash).

The acquisition of Tableau is expected to be completed during Salesforce’s fiscal third quarter, ending October 31, 2019, subject to customary closing conditions.

The transaction is expected to increase Salesforce’s fiscal 2020 total revenue by about $350 million to $400 million. This estimate reflects a fair value adjustment to reduce unearned revenue and unbilled unearned revenue by approximately 30%. Fiscal 2020 revenue is now expected to be in the range of $16.45 billion to $16.65 billion, an increase of 24% to 25% year over year.

Excluding Thursday’s move, Salesforce had underperformed the broad markets, with the stock up nearly 8% year to date. In the past 52 weeks, the stock was up only 1%.

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

  • OTR Global has a Positive rating.
  • Wedbush has an Outperform rating with a $184 target.
  • Nomura has a Buy rating with a $180 price target.
  • Compass Point has a Buy rating and a $190 price target.
  • Morgan Stanley has a Buy rating with a $178 price target.
  • Jefferies has a Buy rating with a $165 price target.

Shares of Salesforce traded down less than 1% on Thursday to $146.54, in a 52-week range of $113.60 to $167.56. The consensus price target is $182.72.


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