CRM Stock: Expect a Muted Quarter from Salesforce.com, Inc.

crm stockSalesforce Stock Is Likely to Take A Breather

salesforce.com, inc. (NYSE:CRM) grabbed headlines in the past few months due to its likely interest in Twitter Inc (NYSE:TWTR), but the deal did not materialize.

Can salesforce.com make headlines again as it announces its third-quarter earnings after market hours on Thursday?

Analysts do not expect any surprises from this quarter. Salesforce.com had managed to beat estimates in its last quarterly results. This quarter, the company is expected to report earnings of $0.21 per share and revenue of $2.1 billion. The average recommendation for CRM stock is “buy.” Out of the 47 analysts who cover salesforce stock, 42 of them have a “buy” rating. Just two of the ratings are “underweight.” (Source: “Salesforce.com Inc.,” MarketWatch, last accessed November 17, 2016).   

In the second quarter, the cloud computing leader had posted a 25% increase in revenue but offered weak guidance for the third quarter. This had hit salesforce stock hard.

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The company had also made clear that it was looking at growth through acquisitions, as it was planning to enter new growth areas of e-commerce and artificial intelligence (AI). Salesforce.com had acquired e-commerce company Demandware Inc (NYSE:DWRE), for $2.8 billion and closed the deal in July. Demandware added e-commerce to the company’s portfolio of online sales and marketing services.

The average target price for CRM stock is about $94.00. Salesforce stock is trading in the green today at around $75.24, which means a potential upside of about 25%. This looks doubtful at the moment after sentiment for the technology sector turned bearish following Donald Trump’s election win.

Salesforce.com is a leading player in customer relationship management software, with major revenue coming from subscriptions and support. However, for its future growth, the company is betting big on artificial intelligence to make its services smarter. The company had initiated efforts called “Einstein” to add machine learning, deep learning, and natural-language processing to its services.

At the “Dreamforce” conference held in October, the company’s executives had talked about the difficulty that salesforce.com was facing in finding data scientists and programmers for its Einstein AI platform. Given the Trump administration’s stance on foreign workers and restrictions on H-1B visas, the future growth plans of the cloud company may face some headwinds and dampen salesforce stock.

There will be a focus on the fourth-quarter guidance, as well as some announcement on the acquisition front. Added comments from salesforce.com CEO Marc Benioff on the Trump presidency might have an impact on CRM stock.