It’s time to break down one of the most popular names within the software industry. Here is the breakdown of $CRM otherwise known as Salesforce.
Current Price: $201.05
52/Wk High: $209.94
52/Wk Low: $115.29
Read below for the breakdown! 👇🏽
Salesforce ($CRM) is a major player in the cloud software world and more specifically workplace (Enterprise) software.
Currently, it is estimated according to TREFIS that 57.8% of the stock price is based on cloud-based CRM software.
Secondly, 36.6% of the stock is based on cloud software, 0.6% based on consulting & services, and finally, 5.0% based on cash.
Since the March lows, $CRM has been on a huge run. The stock has bounced of lows of roughly $125/share to the present price of $201.05/share.
Furthermore, the technicals according to the six-month daily chart are relatively solid for investment. Currently, the RSI sits at 58.09. Secondly, the MACD sits at an attractive momentum but still has the risk of a downside reversal.
Finally, the six-month charts are strongly above the 50 and 200 days (simple and exponential) moving averages.
Digging into the numbers $CRM reported solid earnings for the Q1 2021 fiscal earnings report. Salesforce reported a beat with an EPS of $0.700 versus the expected $0.693 EPS consensus. Revenue also came in strongly at a whopping $4.87 billion representing an upside of 30%.
On the downside, $CRM has a current debt level of $3.058 Billion. In opposition to their debt the company has a solid cash on hand level of $9.802 billion as of April 30th.
Moving onto the forecast for Q2
the expectations were mild. $CRM expects an EPS of $0.66 to $0.67 and a strong revenue of $4.89 billion to $4.90 billion for revenue within the fiscal 2nd quarter.
For the full year, Salesforce expects an EPS of $2.93 to $2.95 and a revenue of $20 billion. These full-year targets represent roughly a 17% gain in revenue.
The analysts are also as flat as the expectations for the 2nd quarter. Currently, the mean price target is $199.63/share representing a 0.71% downside.
Furthermore, the high price target is $225.00/share representing 11.91% profit, and the low price target is $120.00/share representing a 40.31% downside.
The big money on the other hand is quite bullish. Currently, 81.99% of $CRM is owned by institutions. Top holders include BlackRock Institutional Investors, Fidelity Management & Research, and Geode Capital Management.
In short, after Friday’s pullback within the technology and cloud sectors I believe $CRM is attractive around $200/share.
Given the upcoming earnings and Salesforce’s history of beating earnings estimates, I expect the stock will run into earnings on August 25th.
In short, I like the stock going into earnings and my mid-term price target is $220/share. On the other side, the stock is prone to volatility and given the current market uncertainty, I would recommend the use of a close stop loss.
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Disclaimer: This is not direct financial advice, simply opinion based on independent research.