Salesforce Analyst Bullish Ahead Of Q2 Print, Says Tableau Deal Has 'Good Revenue Synergy'

Shares of salesforce.com, inc. CRM have been under pressure due to macroeconomic concerns, currency headwinds and skepticism surrounding the recently announced acquisition of Tableau Software, Inc. DATA.

The cloud-based software company’s stock could experience some relief from second-quarter results that are scheduled for release Aug. 22, according to Wedbush.

The Analyst

Steve Koenig maintained an Outperform rating on Salesforce and lowered the price target from $192 to $184.

The Thesis

Salesforce could report second-quarter revenue and EPS that come in ahead of consensus expectations by $22 million and 4 cents, respectively, Koenig said in a Tuesday note. (See his track record here.) 

The software company is likely reiterate its full-year revenue guidance, the analyst said.

Koenig said he expects the early close of the Tableau acquisition to offset the strong currency headwinds being witnessed by Salesforce.

Checks reveal that the acquisition of Tableau is a “strategic move with good revenue synergy,” he said. Tableau could contribute $580 million to revenue in the back half of the year, which would support the full-year guidance, Koenig said. 

Tableau should generate close to $700 million in billings and $100 million in free cash flow in the back half of the year, the analyst said. The transaction does have a negative impact on full-year EPS, he said. 

While naming Salesforce as a “Wedbush Best Idea,” the analyst said the price target reduction is due to “lower peer multiples and mixed estimate revisions.”

Price Action

Salesforce stock was trading higher by 1.42% at $145.67 at the time of publication Tuesday. 

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Photo courtesy of Salesforce.