Analysts at Wedbush expect the “Comeback Kid” Salesforce.com, Inc. (NYSE:CRM) to share more positive news when it hands down its second quarter results on Wednesday, August 30.
They expect Salesforce to deliver headline results that should modestly beat Street expectations.
The consensus among Street analysts is for Salesforce to report earnings per share of $1.90 on revenue of $8.52 billion for 2Q.
“We believe this will be another step in the right direction on the comeback story for Salesforce to further prove to the Street a renaissance of growth is on the doorstep for the customer relationship management stalwart for the 2024 and 2025 financial years,” the Wedbush analysts wrote in a note to clients.
They believe Salesforce is in a balanced position of growth and profitability, noting that the company was finally starting to build on its key acquisition of productivity and communication platform Slack.
“One of the biggest initiatives in the field is around monetizing the AI theme within the CRM massive installed base,” they wrote.
“We believe this is a major land grab opportunity that could significantly benefit CRM over the coming years and could increase overall revenue by $4 billion-plus annually based on our estimates and fieldwork by 2025.”
They have an ‘Outperform’ rating on the stock and US$240 price target.
Salesforce shares traded at US$211.23 in the early afternoon on Monday.
Analysts at Jefferies are also positive on the stock ahead of its earnings report, awarding it a ‘Buy’ rating and a US$250 price target.
They believe the focus for Salesforce’s 2Q earnings will be on whether the company can deliver upset to its 28% 2024 financial year margin guidance.
“We believe there is more room to drive margins higher as CRM (28% operating margins in the 2024 financial year) lags large-cap peers in the mid to high 30s,” they wrote.
Updates on its AI and restructuring efforts are also anticipated.
The analysts noted that CRM trades attractively at 21 times their 2024 free cash flow estimate versus comparisons at 30 times, implying a 25%-plus discount to the peer group.
“We see CRM as a $10-plus earnings story in the 2025 calendar year, implying a $250 stock at 25 times,” they wrote.
Contact the author at emily.jarvie@proactiveinvestors.com
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