Q3 Preview: Analysts See Upside for Salesforce.com (CRM) on Accelerating Trends, Timing


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Salesforce.com ( CRM ) shares are trading lower ahead of the company's third-quarter 2012 earnings report, expected out after the market closes Thursday.

The Street sees earnings of 31 cents per share on revenue of $571.42 million. The company reported earnings of 31 cents in the same period last year.

Shares of Salesforce.com fell 8 percent in the quarter and are down 5 percent since. The stock has traded within a range of $109.22 to $160.12 over the last 52-week time frame.

Last quarter, Salesforce ended with $4.26 of cash per share and a book value of $10.47 per share.

Data from Bloomberg has 29 analysts with a Buy rating, 10 at Hold, and three with a Sell on Salesforce. The price target average is $160, with a low of $112 and high of $200.

Heading into results, investors are driving up the price of calls versus puts, with November 130 calls down about 36 to 37 percent, and implied volatility of 184 percent. December 130's are down 15.3 percent.

Analyst Comments

  • Goldman Sachs is modeling for earnings of 31 cents and revenue of $570 million. Goldman said checks point to potential upside on all fronts in the quarter, and revs and bookings to rise in fiscal 2013.

    Goldman said, "We expect CRM to raise top-line guidance, and as such, coupled with expectations for slightly below trend deferred forecasts over the next few quarters, we see room for bookings forecasts to rise as we head into FY13. As such, despite our view that CRM will take down consensus operating margin expectations for next year to a range of flat to +100 bp (consensus +260 bp) we see the focus on bookings growth as driving outperformance in the shares."

  • Wells Fargo sees earnings of 30 cents per share and revenue of $570 million. The firm likes the momentum buildup post Dreamforce, which has continued across all product categories.

    Commenting, "SFDC's social enterprise message around Radian6 and the integrated social data model is resonating very well with customers anddriving demand for core sales and service cloud solutions. SFDC is really the only vendor in the market that can deliver a unified customer data model across sales, service and social. The Heroku platform integration with Facebook is also creating a virtuous loop and creating more interest in the social story."

  • Deutsche Bank is modeling for earnings of 31 cents per share with revenue of $570 million, largely in-line with the Street. Deutsche said checks indicate "timing of DreamForce allowed the company's sales force to get in front of prospects and close deals, while front running the customary end-of-year budgetary discussions to allocate greater share of budgets in 2012." Further, Deutsche notes growth accelerated both through the quarter, and over the same period last year, stating, "Transaction growth in the quarter ticked up to 65% y/y, vs 58% in 2Q and 41% a year ago. Sequentially, 3Q grew 14%, vs 13% in 2Q. YTD transactions increased 62% vs same time last year, compared to 47% a year ago. Ex-chatter, transaction growth also accelerated q/q to 14%, vs 13% and 10% a year ago; y/y growth increased to 43% vs 41% last year."
Stay tuned to StreetInsider.com's EPS Insider section to see our analysis of the highly-anticipated quarterly results within seconds of their release. You can also check out Salesforce's past performance at Streetinsider's Salesforce Income Statement .

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Investing , Stocks

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