Salesforces trailblazing results ease doubts on Wall Street

Salesforce.com Inc. posted its biggest gain in five months as the software company eased shareholder jitters after first-quarter results and a strong revenue outlook topped Wall Street projections.Several analysts reiterated buy-equivalent ratings on the stock with Credit Suisse’s Brad Zelnick calling the results a “trailblazing start” to fiscal 2020. Derrick Wood, an analyst at Cowen, recommended being “aggressive buyers of shares” since concerns about billings and business momentum have now been largely put to rest.The shares rose as much as 4.8 per cent Wednesday, their biggest gain since Jan. 4. Why tech giant Salesforce is cozying up to Canada Apple, Salesforce team up to boost number of mobile business apps Microsoft tops $1 trillion valuation for first time as it predicts more cloud growth Here’s what analysts are saying:• SunTrust Robinson, Terry Tillman: “Salesforce remains a top large-cap core tech holding in our opinion.”“We are encouraged by the company’s ability to maintain revenue guidance despite expecting more than US$200 million in FX headwinds for FY20.”• Wedbush, Steve Koenig: Salesforce.com’s first-quarter revenue beat by “an impressive” US$55 million despite increasing foreign currency headwinds. “Billings, unearned revenue and cash flow metrics were also well ahead of expectations.”“The only middling metrics were the new remaining performance obligation (RPO) and current RPO disclosures, which were only in line with guidance on a constant-currency basis.”Koenig said he’s “noticed increasingly negative sentiment” on Salesforce.com, but solid results for the first quarter “should set the stage for more positive price action from this SaaS bellwether as it beats and raises expectations throughout this year.”• Piper Jaffray, Alex Zukin: “Salesforce posted a strong quarter, with beats across major metrics including billings, revenue and (operating cash flow), while current RPO growth came in slightly below guidance due to FX headwinds.”“While we were surprised to see the weaker-than-expected RPO, we acknowledge the lack of historical data and newness of the metric, and would expect typical patterns of guided metric outperformance to resume going forward.”“We believe the stock remains attractive here given growth durability and favorable valuation.”• Cowen, Derrick Wood: “We would be more aggressive buyers of shares” with first-quarter concerns now largely put to rest.“Commentary around the demand (environment) and benefits from recent internal changes were encouraging.”“Investors should be reminded of the stability and durability” of Salesforce.com’s business model given the solid quarterly performance amid some internal changes.• Credit Suisse, Brad Zelnick: “First-quarter results were a “trailblazing start” to fiscal year 2020. “The outperformance was broad-based with notable strength in MuleSoft helping drive +24 per cent y/y constant currency, current RPO growth and 22 per cent organic constant currency billings growth.”“We continue to appreciate CRM’s positioning among various enterprise IT spending drivers.”• Bloomberg Intelligence: Anurag Rana, a senior technology analyst: “Salesforce.com’s 1Q results reiterate the company’s sound execution in the strong IT-spending environment. With 22 per cent / growth in its remaining performance obligations, or sales under contract, this stability should persist.” read more