Preview: What to Expect From Salesforce’s Earnings on Tuesday
The San Francisco, California-based software company Salesforce is expected to report its third-quarter 2022 earnings of $0.28 per share, which represents a year-over-year decline of over 80% from $1.74 per share seen in the same period a year ago.
The leading provider of enterprise cloud computing solutions would post revenue growth of over 25% to $6.8 billion. In the last two quarters, the company has beaten earnings estimates at all times.
“Our survey points to a strong qtr w/ 76% of partners who met/beat targets in 3Q, well above 55% in 2Q. In turn, 83% see forward qtr pipeline growth trending in-line or higher, the highest figure in 7 Qtrs. Our due diligence on gov’t was also strong w/ 3Q growth accelerating vs. 2Q. While FX could be a modest governor, we expect a solid beat & raise,” noted J. Derrick Wood, equity analyst at Cowen.
Salesforce shares traded about 1.02% lower at $286.20 on Friday. The company will report its fiscal third-quarter earnings on Tuesday, November 30.
Salesforce Stock Price Forecast
Thirty-eight analysts who offered stock ratings for Salesforce in the last three months forecast the average price in 12 months of $329.25 with a high forecast of $375.00 and a low forecast of $242.00.
The average price target represents a 14.97% change from the last price of $286.38. Of those 38 analysts, 32 rated “Buy”, six rated “Sell” while none rated “Hold”, according to Tipranks.
Morgan Stanley gave the base target price of $360 with a high of $498 under a bull scenario and $220 under the worst-case scenario. The firm gave an “Overweight” rating on the cloud-based software company’s stock.
Several other analysts have also updated their stock outlook. BofA Global Research raised the price objective to $360 from $330. Citigroup lifted the price target to $308 from $280. Jefferies upped the target price to $360 from $325.
Technical analysis suggests it is good to buy as 100-day Moving Average, and 100-200-day MACD Oscillator signals a strong buying opportunity.
“Supporting evidence for management’s renewed commitment to drive both growth AND operating margin expansion is key to pushing the multiple higher. The potential for 30%+ FCF growth and multiple expansion makes Salesforce (CRM) our top pick in large-cap software,” noted Keith Weiss, equity analyst at Morgan Stanley.
“Salesforce remains one of our best secularly positioned names given enterprise IT spend prioritized towards digital transformation. Following the underperformance in shares posts in the Slack deal announcement, we see a favourable risk/reward and an attractive valuation for a leading franchise. While we continue to see the $28 billion price tag for Slack as high, we are more constructive on the asset after two quarters of improving new customer and billings growth at Slack. Further, we see guidance for ~150bps FY23 operating margin, despite Slack dilution, as a sign of better cost efficiencies and that management is increasingly focused on showing greater profitability.”
Check out FX Empire’s earnings calendar