SalesForce.com Inc. (CRM-N)

Still some runway, with 12-month price target of $242.75. Margins around 40%, revenue's up YOY by 10-12%. Einstein AI has been released. Continues to do collaborations. Loves it. 

They can explode their earnings higher, based on their AI, Einstein. He's met users who have been thrilled by Einstein.

Rallied before las year's interest rate hikes when the street suddenly rewarded profitable companies and sunned non-profitable tech. Activists led to the company improving operating margins and earnings. Last week's quarter really beat estimates.

He's worried that every one of the 34 analysts covering it raised estimates after the previous quarter. It comes down to CRM controlling spending. They report later today.

They report later today. Is up 61% YTD after a rough 2022. She forecasts $1.90, up 60% over 2022 YOY, and more cost-cutting. Margins are improving, because we're starting to sales rebounce after bottoming in the first 6 months this year. Expects revenue to rise 10%. Enteprise software has improved. Hopes they can bring in new coporate customers.

Reports next week and she expects a good quarter. Shares are up 50% YTD, but so will earnings. They will show better topline numbers.

CRM is another big tech stocks comeback story, rallying 20% in the past year, but 65% year-to-date after plunging to end 2022. Activist investors have been driving cost cutting to beef up profit margins rather than raise sales growth. The results: Q1 revenues topped estimates, operating margins improved and the company raised the July revenue forecast from $8.49 billion to $8.52 billion. Something is working. Add to this momentum, CRM throwing their hat into the Generative AI ring with Einstein and AI Cloud. The new tech can help enterprise clients craft emails, service briefings, case summaries and work orders. Read 3 Big Tech Stocks Making a Comeback for our full analysis.

Is up 68% YTD, caught in the hot tech rally. Activist investors in the recent past helped make the company more efficient. Just reported and is selling off in after-hours trading, a victim to high expectations. CRM reported a great quarter: an earnings beat with higher-than expected sales, huge cash and raised guidance, but that still wasn't enough. Again, expectations were so high.

It has a bright future because of Einstein (https://www.salesforce.com/products/einstein/overview/), which uses a lot of AI. Even if their report disappoints, he'd add to the position he sold. He still expects good things by year's end.

Is hitting a 42-week high, but he's not excited to get back into it. The PE remains rich. Yes, estimates are rising because of cost-cutting, but sales estimates are going down.

Very good CRM product.
Excellent business that is founder led & owned.
Better names to invest in tech sector.
Wait for share price to fall to ~20x earnings before buying. 

We like CRM a lot, for growth (high), valuation (OK, for a tech) and management. Momentum is excellent and the stock hit a new high today ahead of earnings next week. It generates good free cash flow and has good potential in a rate pivot. It should grow at 10% this year and accelerate higher into 2024/25. We would be fine buying. 
Unlock Premium - Try 5i Free

The last quarter has seen a major improvement in revenue growth and shares now have price momentum

Today they delivered a top and bottom beat with much-higher margins and strong full-year forecast. Plus, they added $10 billion in share buybacks. Shares are soaring after hours, so management have more ammo to fend off activists.