Actionable news
All posts from Actionable news
Actionable news in CRM: SALESFORCE.COM Inc,

Salesforce Q2 Results A 'Speedbump' To $20 Billion, Says Morgan Stanley, inc. CRM reported disappointing Q2 billings due to “shaky execution,” currency headwinds and increasing seasonality, Morgan Stanley’s Keith Weiss said in a report. He maintained an Overweight rating on the company, while reducing the price target from $110 to $107.

Missing Already Low Expectations

After having reported stronger-than-expected Q1 results, Salesforce’s y/y billings growth trajectory seems to have “hit a speed bump” in Q2, having slumped from 31 percent to 15 percent, analyst Weiss mentioned.

Management indicates several reasons for the slowing, including rising FX headwinds, increasing seasonality in the overall subscription business, and weakness in US.

Not A Trend

Although the slowdown in Q2 billings growth was both unexpected and disappointing, the performance of one quarter cannot be termed as a trend, Weiss noted. He added that a broader analysis indicated:

  1. Multiple growth engines gaining market share
  2. Continued growth of a massive potential opportunity, estimated at $165 billion, as the company brings new innovation to the market
  3. An expanding distribution ecosystem, highlighted by growing SI investment around the platform

The EPS estimates for FY18 and FY19 have been reduced from $0.74 to $0.72 and from $1.18 to $1.15, respectively. The analyst added, “We still find ample support for our long-term view and would look to any pullback as an opportunity to build positions in the preeminent secular growth story in software.”

Do you have ideas for articles/interviews you'd like to see more of on Benzinga? Please email with your best article ideas. One person will be randomly selected to win a $20 Amazon gift card!

Sep 2016WunderlichMaintainsBuy
Sep 2016BarclaysMaintainsOverweight
Sep 2016Morgan StanleyMaintainsOverweight

© 2016 Benzinga does not provide investment advice. All rights reserved.