salesforce

Salesforce.Com Soars After Blowout Quarter

Salesforce.Com Inc. (CRM) is trading higher by more than 20% in Wednesday’s U.S. session after beating fiscal Q2 2021 profit estimates by $0.77 per-share and guiding fiscal year top and bottom line above consensus. The San Francisco-based cloud software company earned $1.77 per-share during the quarter while revenue rose an impressive 28.9% year-over-year to $5.15 billion, triggering a strong buy-the-news reaction despite lowered Q3 EPS guidance.

Salesforce.Com Added To Dow Jones Industrial Average

The keepers of the Dow indices announced on Monday that Salesforce.com would be added to the Dow Jones Industrial Average, one of three blue chips replacing the departing Pfizer Inc. (PFE), Exxon-Mobil Corp. (XOM), and Raytheon Technologies Corp. (RTX). The bullish news lifted the stock more than 3.0% in Tuesday’s session on the heaviest trading volume since June 2019, ahead of this morning’s vertical slingshot.

Monness Crespi and Hardt analyst Brian White raised his target from $195 to $275 after earnings, noting the company “reported excellent 2Q 2021 results and provided a strong 3Q 2021 outlook while sharply increasing FY2021 guidance. Although we expect this new economic reality to mask Salesforce’s true growth potential over the next year, we believe this crisis will prove a catalyst for digital transformation initiatives and Salesforce will emerge from this downturn even stronger.”

Wall Street And Technical Outlook

Wall Street consensus is off-the-charts after this week’s bullish events, with a ‘Strong Buy’ rating based upon 28 ‘Buy’, 2 ‘Hold’, and just one ‘Sell’ recommendation. Price targets currently range from a low of $160 to a street-high $300 while the stock is now trading just $26 below the high target. This placement is a two-edged sword because it could persuade some analysts to raise price targets while others issue downgrades based on valuation.

Technically speaking, Saleforce.com is nearing historic extremes in overbought readings, with relative strength indicators approaching levels that set off major sell signals in 2017 and 2019.  The stock has also rallied more than 20% on Wednesday and more than 40% in the last four weeks. Taken together with approaching Wall Street targets, the vast majority of investors should stand aside and look for lower-risk buying opportunities with greater upside potential.