Top Analyst Says Salesforce (CRM) Stock Might Get Dragged Down by Market — How Does it Hold Up Ahead of Q3 Earnings?

Monness’ top analyst Brian White says investors are wearing “bear goggles” when it comes to Salesforce (CRM), but he sees things with a bit more clarity. The analyst explains that the cloud computing software company gave off bullish vibes at the 2018 Dreamforce conference in September, which brings techies together to discuss the future of IT. However, now with the market growing “treacherous” as White says, the “mood of the market will play a deciding role in the near-term decision of the stock, rather than fundamentals.” The company is scheduled to report third-quarter earnings today at 5:00 p.m. Currently, White maintains a Buy rating for the stock, with a price target of $170.

According to TipRanks, which measures analysts’ and bloggers’ success rate based on how their calls perform, 5-star analyst Brian White has a yearly average return of 16.6% and a 63% success rate. White has a 20.5% average return when recommending CRM, and is ranked #68 out of 5,132 analysts.

“We believe Salesforce will at least meet our 3Q:FY19 revenue forecast of $3.359 billion (up 24% YoY on an ASC 606 adjusted basis; Street is at $3.370 billion) and our Non-GAAP EPS estimate of $0.50 (Street is at $0.50). Our 3Q:FY19 revenue projection represents 2% QoQ growth, below the five-year average of up 6% QoQ for past October quarters and the up 5% delivered in 3Q:FY18. Recall, Salesforce’s 3Q:FY19 outlook calls for sales of $3.355-3.365 billion and EPS of $0.49-0.50,” White said.

“We are projecting 3Q:FY19 subscription & support sales of $3.138 billion (up 25% YoY) and professional services & other of $221 million (up 13%). Given the shift to ASC 606, Salesforce introduced a new metric called Total Remaining Transaction Price (RTP) on its earnings call in late May. Total RTP grew by 36% YoY to $21 billion in 2Q:FY19 with Current RTP of $9.8 billion,” the analyst added.

It seems that despite the treachery of the market, analysts think CRM is worth a shot. Out of 30 analysts surveyed by TipRanks, 28 give CRM the go-ahead, rating the stock a buy, while two are sidelined. The consensus price target stands at $173.10, which shows an upside of 37.58%. (See CRM’s price targets and analyst ratings on TipRanks)

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