"Can we at least stipulate that if Salesforce.com (CRM) had reported this identical quarter four months ago, the stock would be up about 10%? That's because while many look at order growth and revenue, the most relevant metric for those who want a semblance of profit is the operating cash flow stat, and that was up about a third more than even some of the biggest bulls were using. In other words, if you wanted to look at a profit metric, not a sales metric, this was truly an amazing quarter."
Canaccord Genuity analyst Richard Davis (Buy, $65 PT)
"We would build or expand positions in CRM shares because we believe this firm has the highest quality franchise among cloud software firms we follow. Meanwhile the stock's valuation looks reasonable at 35x 2015E EV/FCF for a 25-30% grower."Oppenheimer analyst Brian Schwartz (Outperform, $71 PT) "Consistent with our preview, CRM reported strong 1Q results and raised its guidance. We believe the key takeaways in 1Q were the growing bookings momentum (billings, backlog, deferred revenue each grew 34%+ y/y) and operating margin inflection. We also anticipate further upside potential to annual guidance given the backlog acceleration and ~35% LTM backlog growth versus the 30% to 31% FY:2015 growth target. Last, the guidance assumes faster 2H organic revenue growth (~26.5% versus ~25.5%), another indicator of sustainable business trends momentum. Bottom Line: While questions about slowing demand for salesforce.com and sustainability of margin expansion have arisen over the past 3-6 months, we believe FY:2015 will be a year like 1Q with CRM delivering on or exceeding expectations." Citigroup analyst Walter Pritchard (Buy, $71 PT) Strong billings with good quality and growing, but controlled expenses held cash flow inline. Guidance suggests mid-20s billings growth is sustainable. We continue to believe CRM is consolidating share of the front-end apps space as customers re-platform their customer experiences. We did reduce our price target to $71 to reflect lower multiple for growth assets (terminal multiple moves from 20x to 18x)." Deutsche Bank analyst Karl Keirstead (Buy, $65 PT) "Salesforce.com (SFDC) grew billings by 35% in FY1Q15 (we estimate organic ex-ET billings growth of ~25%), versus what we believe to have been investor expectations for ~30%-32% growth. Total backlog growth was solid at 34% (consistent with momentum in recent quarters), the FY15 revs guidance was raised by $40m, SFDC reiterated guidance for 125-150bps of margin improvement in FY15 and the non-GAAP EPS guidance was nudged up slightly. Bottom line, this print reaffirms our confidence in the fundamentals (including the core SFA business and the recent sales changes) following our upgrade to a BUY rating a few weeks ago." JMP Securities analyst Patrick Walravens (Market Outperform, $75 PT) "Overall, we are pleased to see salesforce.com start the year off strong (F1Q last year was disappointing) and feel the company is set up well to achieve its goals for the rest of the year as the leader in enterprise cloud computing. We maintain our FY15 non-GAAP EPS of $0.51 (consensus $0.50), and maintain our FY16 non-GAAP EPS of $0.77 (consensus $0.70).
Our $75 price target implies a CY15E EV/free cash flow multiple of 36x, roughly in line with the company's revenue growth rate, and represents an CY15E EV/revenue multiple of 6.7x versus the overall SaaS peer group multiple of 4.9x and the high growth SaaS multiple of 7.4x." --Written by Chris Ciaccia in New York >Contact by Email. Follow @Chris_Ciaccia
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