Salesforce Sinks 3.5% After-Hours As Guidance Slashed

Shares in Salesforce.com (CRM) pulled back 3.5% in after-hours trading on weaker-than-expected guidance due to macro uncertainty. That was despite solid results for the fiscal first quarter including Q1 Non-GAAP EPS of $0.70 ($0.01 above consensus) and GAAP EPS of $0.11 ($0.10 above consensus).Revenue of $4.87B, up over 30% year-over-year, also beat consensus expectations by $20M and operating cashflow came in at $1.86B.However, F2Q total revenue guidance of $4.89–4.90B (+22% to +23% y/y) fell short of the $5.04B consensus, while EPS guidance of $0.66–0.67 was also below the $0.70 consensus.Similarly, FY2021 guidance was revised lower for COVID-19, with total revenue lowered by ~$1.0–1.1B to ~$20.0B (vs $20.63B consensus) and EPS guidance lowered by ~$0.23 to $2.92–2.95 (vs $3.06 consensus estimate).The guidance revisions were attributed to IT spending normalizing next year, downtick in revenue retention, shorter contract duration, and non-recurring payments in F1Q.Following the report, Oppenheimer’s Brian Schwartz reiterated his CRM buy rating and $195 price target (8% upside potential).“The magnitude of the revenue reduction is somewhat difficult to follow given the constructive pipeline commentary and attractive new opportunities from COVID-19 in Public Sector, Financial Services, Healthcare, and with Work.com, and does little to explain the new FY2021 revenue guidance other than assuming a higher level of conservatism” he wrote.Nonetheless, the analyst is staying onside, concluding: “While CRM’s guidance is more cautious than peers and recovery is not expected until early FY:2022, we see decent valuation support at 7x recurring revenues.”Indeed, the stock retains its Strong Buy Street consensus with 17 recent buy ratings, 1 hold rating and 1 sell rating. The $191 average analyst price target indicates upside potential of 5%. Shares are currently trading up 11% year-to-date. (See CRM stock analysis on TipRanks).Related News: Apple Snaps Up AI Startup Inductiv, As Analysts Boost PTs On Store Reopenings KKR Invests $1.5 Billion in Reliance’s Jio Platforms In Biggest Deal In Asia Microsoft Buys Metaswitch For Cloud-Based Telecoms Move, 5G Expansion More recent articles from Smarter Analyst: * Cisco To Buy ThousandEyes For Reported $1B; Top Analyst Sees Strong Synergy Potential * AutoZone Surprises with Business as Usual Quarter * Logitech Shares Lifted In Pre-Market On Share Buyback Plan, 10% Dividend Boost * Billionaire Ackman Exits Berkshire Hathaway, Blackstone To Fund Opportunities Read More...

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Shares in Salesforce.com (CRM) pulled back 3.5% in after-hours trading on weaker-than-expected guidance due to macro uncertainty. That was despite solid results for the fiscal first quarter including Q1 Non-GAAP EPS of $0.70 ($0.01 above consensus) and GAAP EPS of $0.11 ($0.10 above consensus).” data-reactid=”12″>Shares in Salesforce.com (CRM) pulled back 3.5% in after-hours trading on weaker-than-expected guidance due to macro uncertainty. That was despite solid results for the fiscal first quarter including Q1 Non-GAAP EPS of $0.70 ($0.01 above consensus) and GAAP EPS of $0.11 ($0.10 above consensus).

Revenue of $4.87B, up over 30% year-over-year, also beat consensus expectations by $20M and operating cashflow came in at $1.86B.

However, F2Q total revenue guidance of $4.89–4.90B (+22% to +23% y/y) fell short of the $5.04B consensus, while EPS guidance of $0.66–0.67 was also below the $0.70 consensus.

Similarly, FY2021 guidance was revised lower for COVID-19, with total revenue lowered by ~$1.0–1.1B to ~$20.0B (vs $20.63B consensus) and EPS guidance lowered by ~$0.23 to $2.92–2.95 (vs $3.06 consensus estimate).

The guidance revisions were attributed to IT spending normalizing next year, downtick in revenue retention, shorter contract duration, and non-recurring payments in F1Q.

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Following the report, Oppenheimer’s Brian Schwartz reiterated his CRM buy rating and $195 price target (8% upside potential).” data-reactid=”17″>Following the report, Oppenheimer’s Brian Schwartz reiterated his CRM buy rating and $195 price target (8% upside potential).

“The magnitude of the revenue reduction is somewhat difficult to follow given the constructive pipeline commentary and attractive new opportunities from COVID-19 in Public Sector, Financial Services, Healthcare, and with Work.com, and does little to explain the new FY2021 revenue guidance other than assuming a higher level of conservatism” he wrote.

Nonetheless, the analyst is staying onside, concluding: “While CRM’s guidance is more cautious than peers and recovery is not expected until early FY:2022, we see decent valuation support at 7x recurring revenues.”

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Indeed, the stock retains its Strong Buy Street consensus with 17 recent buy ratings, 1 hold rating and 1 sell rating. The $191 average analyst price target indicates upside potential of 5%. Shares are currently trading up 11% year-to-date. (See CRM stock analysis on TipRanks).” data-reactid=”20″>Indeed, the stock retains its Strong Buy Street consensus with 17 recent buy ratings, 1 hold rating and 1 sell rating. The $191 average analyst price target indicates upside potential of 5%. Shares are currently trading up 11% year-to-date. (See CRM stock analysis on TipRanks).