This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Salesforce.com Plunges: What Wall Street's Saying

Stocks in this article: CRM

TheStreet's Jim Cramer

"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.

2 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Jim Cramer and Stephanie Link reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

Jim Cramer's protégé, David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
Try it NOW
Try it NOW
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

Jim Cramer's protégé, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!

Markets

DOW 17,672.60 -141.38 -0.79%
S&P 500 2,051.82 -11.33 -0.55%
NASDAQ 4,757.8790 +7.4820 0.16%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs