Salesforce Stock Price Upside Is Sustainable

Salesforce (NYSE: CRM) stock price bounced back sharply after experiencing volatility in the previous few months. The upside momentum is driven by the analyst’s confidence in future fundamentals and robust financial numbers.

CRM shares are currently trading around $160. Fortunately, market pundits are seeing the extension of the bullish trend into fiscal 2020.

In addition, the high double-digit revenue and earnings growth are adding to investor’s sentiments. Salesforce stock price is up only 20% year to date. Some analysts are also praising their valuations and the potential growth in free cash flows.

CRM salesforce.com, inc. daily Stock Chart

Analysts Boosted Salesforce Stock Price Target

The majority of market analysts are bullish about CRM shares. UBS has set a Buy rating with the price target of $190. The firm expects CRM to extend the bullish trend into fiscal 2020. UBS analyst says attractive valuation along with expected FCF growth and improving demand trends are likely to enhance investor’s sentiments.

Jefferies and Cowen also increased their price targets. Jefferies provided Buy rating with a price target of $195. The firm anticipates sustainable revenue and earnings in the long-term for Salesforce. Cowen says the company is well-positioned to beat its guidance for the following quarters.

Record Q2 Result and Higher Guidance is Enhancing Sentiments

The company has generated a record second-quarter revenue of $4 billion in Q2. This represents growth of 22% from the same period last year. Subscription and support revenues grew 22% year over year to $3.75 billion.

An enormous wave of digital transformation is sweeping across every industry, and major brands, like FedEx, AXA and Unicredit, turned to Salesforce in the quarter to propel their growth,” said Keith Block, co-CEO, Salesforce.

The company has also raised its guidance for the full year. It now forecasts FY20 revenue in the range of $16.75-16.9B. This represents a growth of 26% from the same period last year. The earnings per share are likely to stand around $2.82-2.84 relative to the consensus for $2.68. Overall, future fundamentals are supporting Salesforce stock price.

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    Based in Saudi Arabia, Siraj has a strong understanding of and passion for accounting and finance. He has worked for international clients for many years on several projects related to the stock market, equity research and other business, accounting and finance related projects. Siraj is a published financial analyst on the world's leading websites including SeekingAlpha, TheStreet, MSN, and others.


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