On The Fly: What to watch in Salesforce earnings report - InvestingChannel

On The Fly: What to watch in Salesforce earnings report

Salesforce (CRM) is scheduled to report results of its third fiscal quarter after the market close on Tuesday, November 21, with a conference call scheduled for 5:00 pm ET. What to watch for: 1. GUIDANCE: Along with its second quarter report in August, Salesforce raised its fiscal year 2018 revenue view to $10.35B-$10.4B from $10.25B-$10.3B and its FY18 adjusted EPS view to $1.29-$1.31 from $1.28-$1.30. Consensus, which stood at $10.28B and $1.30 for revenue and earnings at that time has edged up to $10.4B and $1.32, respectively, per share. 2. MICROSOFT COMPETITION: On October 5, Canaccord upgraded Microsoft (MSFT) to Buy from Hold, saying that investors are underestimating the company’s growth drivers. Microsoft could generate “explosive” growth by expanding its competitive video game business, also known as e-sports, analyst Richard Davis said, adding its marketing business is “emerging” and could become similar to that of Salesforce. 3. WALL STREET CONFIDENCE: Over the last month, several Wall Street analysts have made bullish comments about Salesforce ahead of the company’s quarterly report. On Thursday, Morgan Stanley analyst Keith Weiss raised his price target on Salesforce to $127 from $107 after attending last week’s Dreamforce user conference and the company’s analyst day meeting. Following the events, Weiss has higher conviction that its strategy is yielding a high volume of large deals and differentiating it from competitors. On November 14, Jefferies analyst John DiFucci said his field checks and partner survey indicate Salesforce “will likely easily exceed” Q3 estimates of 10% billings growth based on modest guidance. He expects continued strong new business growth in the Americas and modest momentum in the commercial segment. Salesforce’s Q4 guidance may come in below estimates, but it should at least hit annual numbers, DiFucci said. In addition, BTIG analyst Joel Fishbein raised his price target on Salesforce to $120 from $100 on November 8 following the company’s Analyst Day, as it focused on outlining long-term targets in the context of operating discipline efforts to expand margins and profitability. The analyst said the company will aim to increase its footprint in the enterprise with a broader product portfolio, adding that the “massive addressable market” and further international expansion leave “plenty of room for 20%+ mid-term revenue growth.