Salesforce Q1 earnings: ‘one of the best risk-rewards in software’
- Salesforce now expects record earnings in its fiscal 2024.
- Wedbush's Dan Ives says "CRM" could easily hit $260.
- Salesforce stock is already up nearly 60% for the year.
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Shares of Salesforce Inc (NYSE: CRM) is trading down in extended hours even though the cloud company reported market-beating results for its first financial quarter.
Should you buy Salesforce stock?
Copy link to sectionThe price action is particularly intriguing since executives raised the guidance as well. They now forecast a record $7.41 a share to $7.43 a share of earnings this year.
To that end, Wedbush Securities’ senior analyst Dan Ives sees the pullback in after-hours as an opportunity to invest in Salesforce.
I think it’s just another quarter in the right direction in terms of margins, in terms of growth. In my opinion, it’s [Salesforce] is one of the best risk-rewards out there in software.
For the current quarter, Salesforce is now calling for about $1.90 a share of adjusted earnings on up to $8.52 billion in revenue. In comparison, analysts were at $1.70 per share and $8.5 billion, respectively.
Salesforce is an AI player
Copy link to sectionEarlier this year, Salesforce lowered its headcount by 10% as it shifted focus from revenue growth to profit margins (read more).
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Other than cost cuts, Ives expects artificial intelligence as well to be a meaningful tailwind for the Salesforce stock. On CNBC’s “Closing Bell”, he said:
Benioff is one of the best in execution. You have an installed base that’s unparalleled. And now, with Slack, Tableau, and AI, that ultimately could be incrementally a $4.0 billion opportunity for Salesforce.
The Wedbush analyst is confident that the cloud stock could easily hit $260 – a price objective that suggests a near 25% upside from here.
Salesforce Q1 earnings snapshot
Copy link to section- Earned $199 million versus the year-ago $28 million
- Per-share earnings also climbed from 3 cents to 20 cents
- Adjusted EPS printed at $1.69 as per the earnings press release
- Sales went up 11% on a year-over-year basis to $8.25 billion
- Consensus was $1.61 a share on $8.18 billion in revenue
- Operating margin (adj) improved 10 percentage points to 27.6%
The California-based company ended the quarter with $24.1 billion worth of remaining performance obligations – up 12% versus last year. Salesforce stock is now up nearly 60% for the year.
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