Story updated at 10 a.m. to reflect market activity.
Salesforce.com fell -2.9% to $52.31 in morning trading.
The firm maintained its "overweight" rating for the company. Barclays analyst Raimo Lenschow raised EPS estimates for Salesforce.com, citing a better than expected revenue guidance and healthy backlog growth.
"Generally speaking, this was probably a solid start to the year for Salesforce.com," Lenschow wrote. "However, with SaaS stocks still trading under pressure and sentiment still lackluster (even after a good quarter - e.g. DATA, N, NOW), it is not clear that these numbers will catalyze a turning point in the near future."
Separately, TheStreet Ratings team rates SALESFORCE.COM INC as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:
"We rate SALESFORCE.COM INC (CRM) a HOLD. The primary factors that have impacted our rating are mixed ? some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its robust revenue growth, expanding profit margins and solid stock price performance. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income, weak operating cash flow and generally higher debt management risk."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth greatly exceeded the industry average of 6.6%. Since the same quarter one year prior, revenues rose by 37.2%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- The gross profit margin for SALESFORCE.COM INC is currently very high, coming in at 84.63%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of -10.18% is in-line with the industry average.
- Compared to where it was a year ago today, the stock is now trading at a higher level, regardless of the company's weak earnings results. Despite the fact that it has already risen in the past year, there is currently no conclusive evidence that warrants the purchase or sale of this stock.
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Software industry. The net income has significantly decreased by 459.5% when compared to the same quarter one year ago, falling from -$20.84 million to -$116.62 million.
- Net operating cash flow has declined marginally to $271.24 million or 3.67% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
- You can view the full analysis from the report here: CRM Ratings Report