Salesforce Still Best Positioned At The Top Of The Cloud

salesforce.com, inc. CRM reported Q4 2016 EPS and revenue ahead of expectations.

The company will likely continue to be “the dominant leader of the mobile/cloud computing (MCC) era,” Wells Fargo’s Philip Winslow said in a report. He added that Salesforce remained “our favorite large-cap stock in our coverage.”

Winslow has an Outperform rating on the company, with a valuation range of $100-$105.

Q4 Results

Salesforce delivered another strong quarter of growth, following robust results for the prior quarter. The company reported Q4 EPS at $0.28, versus consensus expectations of $0.25. Revenue came in at $2.294 billion, higher than the consensus estimate of $2.275 billion.

While subscription and support revenue was broadly in-line with expectations, professional services revenue came in significantly ahead.

“Specifically, slipped deal closings due to macroeconomic factors that afflicted many of Salesforce.com's peers during October and November 2016 did not appear to affect the company, which grew billings 33.2% year-over-year versus 28.0% in the year-ago quarter,” Winslow pointed out.

Projections

Salesforce raised its FY2018 revenue guidance from $10.10-$10.15 billion to $10.15-$10.20 billion.

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The company should be able to “continue to stretch its competitive lead in becoming the front-office suite for the large enterprise and to maintain attractive billings growth,” the analyst commented.

Salesforce had “a unique opportunity to cross-sell its multiple clouds into existing customers (while still attracting net new customers) as well as take advantage of green field opportunities outside of the U.S.,” Winslow added.

The analyst raised the revenue estimates for FY2018 from $10.164 billion to $10.176 billion.