CRM: What To Watch For on Thursday

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Richard Davis and David Evanson, Spring, 2012

Canaccord Genuity technology analyst Richard Davis said he believes (CRM) shares “could jump 3-8% on Friday following what we expect will be a bullish print and improving investor sentiment about growth stocks due to 1) at least temporary exhaustion of risk-off selling of high valuation growth stocks, and 2) a positive halo effect from a successful Facebook IPO.”

He noted four things to watch for on the Thursday night print:

Revenues and FCF/share. Results above our $677 million (+34%) and $1.03 estimates on a 38% tax rate would be bullish (we’re looking for non-GAAP EPS of $0.34).

A normalized calculated billings growth rate >30%. The question on everyone’s mind is whether a solid Q4 drained deals from the forthcoming April quarter or the macro economy worsened. We don’t believe so in either case.

Qualitative discussions of the world economy. This will be a verbal “body language” moment for CEO Benioff as investors will try to intuit incremental fear or confidence in outlook.

And something we’d like to hear. In our view, unless becomes a meaningful development platform it will be difficult, but not impossible, for Salesforce to reach the $10 billion revenue pot of gold on the 4-5 year hill in the distance.