Salesforce.com Inc. (NYSE:CRM) reported first quarter earnings and revenue that beat analyst expectations on Thursday evening. The company’s stock rallied 5.5% on Friday to reflect the positive performance.
The company also issued bullish guidance on revenue for the coming quarter and full-year 2022. CRM stock has a consensus buy rating based on analysts polled by Marketbeat. The average price target of $273 presents an upside potential of about 14.72%.
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However, CRM stock is still down 3% over the past six months which has some investors wondering if the company’s strong outlook is more than reflected in the current stock. So, let’s take a look and see if this is the case.
CRM key highlights from Q1
Salesforce posted revenue growth of 23% Y/Y to $5.96 billion. This was better than the consensus analyst expectation of $5.89 billion. Subscription and support revenue for the quarter increased by 21% from last year to $5.54 billion.
Adjusted diluted earnings per share for the quarter came in at $1.21 beating analyst expectations of $0.88 per share. First-quarter operating cash flow was $3.23 billion up 74% Y/Y.
The company also issued strong revenue guidance for the next quarter and full-year 2022 results. CRM now expects to post a top line in the range of $6.22 billion to $6.23 billion in the July quarter. Revenue for the fiscal year 2022 is expected to come in at $25.9 billion to $26 billion.
Shares of the company are now trading at a trailing P/E ratio of about 54.07, which is several levels below its 12-month average P/E of about 59.08 This suggests that the CRM stock price has a bit of room left to run going into June.
Technically, shares of Salesforce.com appear to have recently bounced off the key support level at around $211. On Friday, CRM stock spiked to create a price gap after finding a boost from the 100-day moving average. It has now completed a channel breakout clearing the path for more upward movement.
Investors can target bullish profits at around the key resistance levels at $260 and $284. Key support levels can be found at $211 and $179.
Analysts from Monness Crespi and Hardt on Friday reiterated their buy rating, raising the price target from $275 to $290 per share.
Bottom line: buy the CRM bull-run
In summary, shares of CRM stock appear to be in recovery move after breaking out of a bearish channel. The CRM P/E ratio is still several levels below its 5-year average, which leaves a lot of room to run. It looks like a great time to buy shares of CRM stock.