All Eyes on Salesforce.com (CRM) FQ1:19 Earnings Tonight

Rosenblatt's Marshall Senk calls for a first fiscal quarter beat for 2019 from CRM this evening; here's why.


As salesforce.com, inc. (NYSE:CRM) gets ready to rumble with a first fiscal quarter print release for 2019 once the bell tolls, Rosenblatt analyst Marshall Senk is out with a confident prediction: his billings expectations ultimately could prove “conservative.”

Senk approaches tonight quite confident in his bullish expectations on the enterprise cloud computing specialist, especially as chatter from customers and partners alike suggests a first quarter that should be “very typical.” Specifically, Senk anticipates opportunity for a beat stemming from continuous customer expansions coupled with adoption of new functionality, as the analyst draws attention to CPQ in sales to Krux in marketing.

Predicting CRM “could have some outperformance, most likely on the billings line driven by customer expansions with new product and functionality,” the analyst reiterates a Buy rating on the stock with a $164 price target. This notably implies a close to 30% upside from current levels. (To watch Senk’s track record, click here)

“We believe that win rates in marketing continue to improve driven both by Krux and the acquisition of Demandware. While we have heard minor rumblings from midmarket focused partners (very typical for Q1 and factored into our numbers) we believe the enterprise business continues to be strong. We also remind investors that Q2 and FY19 guidance will shift significantly due to the closing of the Mulesoft acquisition (May 2nd) and more visibility on ASC 606 impact on the balance of the year,” highlights the analyst.

True, this is a tech stock that has come under fire regarding the Mulesoft takeover, from the sheer price paid to the dilution aspect- a word that always riles up investor frustration. Yet, the analyst remains unfazed: “Our perspective is that the company has proven over time that it can successfully absorb and accelerate growth in the assets it acquires as evidenced by the strong performance in the Marketing Cloud (Exact Target) and Commerce Cloud (Demandware).”

Bottom line, Senk sees a Mulesoft purchase poised for success. Not only is a meaningful “customer pain point” tackled here, but likewise, CRM has the opportunity to generate fresh revenues, especially “as easier integration opens up new avenues for platform-based customizations.”

TipRanks suggests strong confidence roaring through the Street on this tech stock, with 26 out of 28 analysts in the last 3 months rating a Buy on CRM and only 2 maintaining a Hold. The 12-month average price target stands at $139.25, marking 10% in upside from where the stock is currently trading.

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