Salesforce Shares Get a Lift

SAN FRANCISCO -- Shares of Salesforce.com(CRM Quote - Cramer on CRM - Stock Picks) rose sharply Thursday following a strong earnings report, despite caution sounded by several sell-side analysts.

Shares jumped $6.31, or 10.1%, to $68.97 before falling back to $66.89 in recent trading. The stock set a 12-month high of $70.17 in early May. Overall, shares have appreciated 49% in the past year and are trading at 163 times forward earnings.

The one-year consensus price target on the stock is $70, according to Thomson Reuters.

Deutsche Bank raised its price target Thursday to $85 from $80, according to Briefing.com. And Jefferies upgraded Salesforce to a buy with a $77 price target, from a previous target of $49.

JMP Securities analyst Patrick Walravens cited several positive signs from Wednesday's report, including healthy cash generation. Cash flow from operations grew 128% year over year, and international sales rose to 28% of revenue vs. 23% one year ago. "We believe the international opportunity is significant," he wrote. Also, attrition rates remain at less than 1%.

But some analysts issued warnings. "Given the stock's valuation, there is greater downside risk than upside potential to Salesforce.com," wrote Goldman Sachs analyst Sasa Zorovic. He reiterated his sell rating and $53 price target.

"Most importantly ... bookings growth was weak -- down 34% sequentially, and deferred revenue of $470 million was down 2% sequentially," the first decline in the company's history, Zorovic wrote. Salesforce is an investment banking client of Goldman Sachs.

"Behind the headline numbers, deferred revenues declined sequentially for the first time in over five years," wrote Friedman, Billings analyst David Hilal.

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