Salesforce (CRM) Edges Higher On a Beat-and-Raise Quarter, Analysts Positive

Shares of Salesforce (NYSE: CRM) are up nearly 3% in pre-open Thursday after the cloud-based software company delivered another beat-and-raise quarterly performance.

CRM reported Q2 EPS of $1.48 to easily top the analyst estimate of $0.92. Revenue for the quarter came in at $6.34 billion versus the consensus estimate of $6.24 billion.

“With companies and governments around the world continuing to accelerate their digital transformations, we delivered our fifth phenomenal quarter in a row. Salesforce has never seen better execution or greater momentum. Our Customer 360 platform is now fueled by a herd of unicorns perfectly designed for this all-digital world. Sales, Service, Marketing & Commerce, Platform, Tableau, MuleSoft and now Slack are all billion dollar-plus products delivering customer success like no other company,” said Marc Benioff, Chair & CEO, Salesforce.

Salesforce projects FY2022 revenue of $26.2-26.3 billion, versus the consensus of $26.01 billion.

Morgan Stanley analyst Keith Weiss reiterated an “Overweight” rating and raised the price target to $305.00 per share from $285.00 per share.

“Renewed discipline balancing growth and profitability was evident in Q2 results and the substantial raise to FY22 revenue and margin targets. Consistent execution on sustaining this balance remains key to rebuilding investors' confidence and pushing the multiple back in line with peers,” Weiss said in a client note.

Citi analyst Tyler Radke maintained a “Neutral” rating but raised the price target to $280.00 per share from $250.00 on CRM following Q2 results.

“Broad-based strength in Q2 drove respectable levels of upside to both topline (cRPO) and profitability (OPM%) expectations, with an expected magnitude of updated guidance follow-through. Evidence of modest reacceleration across businesses, commentary on drivers of large deal performance, and confidence in recently-acquired Slack opportunity are all promising, though we suspect investors will be preoccupied with the upcoming 9/23 Analyst Day before shares can potentially benefit from a broader ‘re-commitment.’ We believe a refreshed margin framework is warranted given recent commentary around the ‘new operating model’–without this, erasing the implied valuation discount becomes more of a topline “show-me” story which could take more time to demonstrate consistent execution.

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