Salesforce.com's Q4 Report Should Trigger Higher Valuation, Says Bullish Oppenheimer

Customer relationship software provider salesforce.com, inc. (NYSE: CRM) is scheduled to release its fourth-quarter results after the market close Monday, March 4.

Analysts, on average, estimate earnings per share, or EPS, of 55 cents per share on revenue of $3.56 billion.

The Analyst

Oppenheimer analyst Brian Schwartz maintained an Outperform on Salesforce with a price target of $180 for the shares.

The Thesis

Salesforce is poised to report solid quarterly results and the prospects for 2019 appear bullish, Schwartz said in a Friday note.

The analyst forecast fourth-quarter revenue of $3.56 billion and pro forma EPS of 54 cents.

Schwartz said he's convinced the company will meet or beat Oppenheimer's expectations, with the optimism predicated on three reasons:

Oppenheimer's customer survey forecast stronger spending seasonality for the business.

The analyst said the company's deal activity and overall demand for enterprise software remain positive, citing the consensus feedback from partner checks.

Data readthroughs for Salesforce.com's trends tilt positive, Schwartz said.

The analyst sees the company remaining well-positioned for mobile engagement spending catalysts. The basic concept of creating customer loyalty and business demand has become much more relevant today due to the advancement in mobile commerce tech and compute, he said. 

"Our research mosaic points to good business trends for salesforce.com, healthy demand for enterprise SaaS and the mosaic raises our conviction for the [fourth-quarter] upside potential," Schwartz said.

Oppenheimer expects the upcoming earnings report to trigger a higher valuation and support its thesis that sees "ongoing share gains, durable growth and increasing cash flow" for the company — even amid a slowing economy.

The Price Action

Salesforce.com shares have rallied about 17 percent year-to-date.

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Photo courtesy of Salesforce.