Salesforce Analysts Remain Bullish Despite Guidance Cut

Salesforce.com topped analyst estimates but cut guidance due to the uncertainty around the coronavirus pandemic.
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Shares of Salesforce.com  (CRM) - Get Report were falling in premarket trading on Friday after the company reported fiscal first quarter revenue of $4.87 billion, a 30% year-over-year increase, and earnings of 70 cents per share. 

Those results topped analyst consensus estimates of revenue of $4.85 billion and earnings of 65 cents per share. 

However, for the July quarter, Salesforce is guiding for revenue of $4.89 billion to $4.9 billion with earnings between 66 cents and 67 cents per share. Analysts are expecting revenue of $5.04 billion and earnings of 74 cents per share. And the company cut its guidance for fiscal 2021 revenue from a range of $21 billion to $21.1 billion down to  about $20 billion, and EPS from a range of $3.16 to $3.18 down to $2.93 to $2.95. 

Shares were falling 3.4% to $175.00 in pre-market trading. 

The analyst community remains undeterred, however. 

Deutsche Bank (Buy, $195 PT unchanged)

Relative to management's strong tone and language on pipeline activity thus far, the guide appeared uninspiring, especially in comparison to the surprisingly better outlook from Workday.

Although, we feel that Salesforce is de-risking the model and being prudent in light of an environment that has never been experienced before. On the guide and forward looking commentary, we’d flag: 1. We believe that the 2QF21 cRPO growth guide of 16% - 17% was roughly in line if not slightly ahead of investors’ expectations.

-Taylor McGinnis

JPMorgan (Overweight, $200 PT unchanged)

Salesforce.com stands out from almost any pack as the pioneering trailblazer of the cloud computing movement, and it has blossomed into a true multi-product success story as it now rides atop multiple product pillars of substantial scale and trajectory.

Billings growth has decelerated or remained roughly consistent in each of the last four quarters. A continued deceleration in the year-over-year billings growth rate, whether due to underlying fundamental challenges or invoicing optics, could provide a headwind for shares of CRM.

-Mark Murphy

Wedbush (Outperform, $204 PT unchanged)

Salesforce’s growth is driven by an innovative SaaS business and technical model, complemented by effective sales and marketing. Salesforce is the bellwether for SaaS adoption, as its multi-tenant delivery and configurable service enable customers to shorten implementation cycles and deploy new technology rapidly. The company has >30% share in its  core sales automation market, while Service Cloud and Marketing Cloud are rapidly gaining share in their respective markets (we estimate 21% and 12% shares, respectively).

-Steve Koenig

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