Salesforce.com Maintains Buy Rating at Deutsche Bank
Friday, November 18, 2021 1:41 PM



Analysts at Deutsche Bank retained Buy rating on the shares of Salesforce.com (NYSE: CRM) following a better-than-expected earnings in its latest quarter. They set a price target of $205 for the stock.

During the quarter, Salesforce.com reported 29 percent year-over-year billings growth that was below DB analysts’ estimate and Wall Street consensus of 37 percent and 33 percent respectively. Analysts believe that billings were impacted by timing of invoices and contract terms of new business. The company’s revenue of $584 million was ahead of analysts’ estimate of $570 million, and Street consensus of $571.5 million. Analysts believe that despite the optics of billings, business momentum continued and actual bookings grew faster than revenue’s 36 percent. They state that the sequential 2 percent decline in deferred revenue was a result of billing cycle shifts from terms of ramped contracts and is not indicative of true business momentum. They add that despite having fluctuations in every quarter, the company has been selling big, enterprise contracts, which are being structured to ramp as new users are implemented and prorated for the annual term. In the past, customers signing a large contract demanded pricing concessions in exchange for prepaying all the contracted seats for a year. They continue to believe that Salesforce.com is distribution constrained and the aggressive expansion of their sales force is justified by a strong pipeline.  

 

Salesforce.com provides customer and collaboration relationship management services to various businesses and industries worldwide. It has a market capitalization of $15.43 billion with a P/E ratio of 555.22.

 

Shares of Salesforce.com slumped 9.57 percent, or $12.06, to trade at $114.03.


 

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