Shares of Salesforce.com are heading up to resistance and may break out to a new all-time high.
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This story originally appeared on MarketBeat
Another Blowout Quarter For Salesforce
Salesforce.com (NYSE: CRM) could not be better positioned for the current environment. The company is the leader, the Creator no less, of what we call customer relationship management today. In simple terms, Salesforce.com provides businesses with the tools to manage and engage with their clientele online while helping consumers find what it is they need on the internet. The shift to digitization, the company’s driving force, is well-known and was accelerated by the pandemic. Results from companies like Shoe Carnival highlight both the need for digitization and the value of CRM data and, specifically, data from Salesforce.
“Our best in class merchandising strategy, innovative store operations and powerful data analytics derived from our CRM program continued to drive outstanding financial results and increases in new customer acquisition,” said Shoe Carnival CEO Cliff Sifford.
Salesforce Beats Consensus And Raises Guidance
The strength of trends within the digital world can be seen in Salesforce Q2 results. The company reported $6.34 billion in net revenue for a gain of 24.3% over last year. Not only is this a company record but it also beat the consensus by 150 basis points and is up 58% vs 2019. The gain is driven by strength across both major reporting segments, Professional Services lead with a gain of 37% while the subscription end of the business grew by 22%.
Moving down to the margin, the company was able to compound the revenue strength by an increase in the margin as well. The operating margin came in at 5.2% with an adjusted operating margin of 20.4%, and both driving earnings above the consensus estimate. The GAAP EPS of $0.56 beat the consensus by $0.54 while the adjusted $1.48 beat by $0.55.
Looking forward, the company is expecting business strength to continue and is guiding the market higher once again. Execs are now expecting revenue in the range of $6.785 billion in the third quarter with EPS of $0.91, nearly $0.10 ahead of the consensus. As for the year, the company is forecasting revenue of $26.25 versus the consensus of $25.95, and for EPS to outpace the consensus of $3.80 buy more than fifty cents.
The Analysts Like Salesforce And Are Driving It Higher
Needless to say, the analysts are very bullish on the stock. Marketbeat’s analyst-tracking tools reveal that no less than 22 sell-side analysts came out with commentary in the wake of the second quarter reports and not one of them was bearish. Among them, there was one new rating initiated at a buy and two upgrades from neutral or buy to outperform, and most came with a price target increase. The new consensus target is just shy of $300 or about a 9% upside from the current price action. It is our view that Salesforce will continue to outperform expectations and that the analyst will continue to drive share prices higher.
The Technical Outlook: Salesforce Is Testing Resistance
Shares of Salesforce shot higher in the wake of the second-quarter report and are quickly approaching new all-time high levels. The indicators are bullish as are the fundamentals so we expect to see the price action reach the $278 level at least. Once there, we expect to see price action consolidate before eventually breaking out to new highs. Once new highs are firmly established, we expect to see the stock advance another $80 and up to the $350 range.
salesforce.com is a part of the Entrepreneur Index, which tracks some of the largest publicly traded companies founded and run by entrepreneurs.