EARNINGS IN FOCUS
SALESFORCE (CRM) Q2–2022
Salesforce (CRM), being a high-growth tech stock, faced the direct impact of a massive market correction due to macroeconomic challenges in 2022. The software giant has provided a negative 30% year-to-date return in 2022 and is currently positioned for long opportunities. The Q2–2022 earnings are vital at the prevailing stock price levels for CRM.
Since the Financial Crisis of 2008, CRM has delivered outstanding holding periods and annual returns. CRM’s valuation is attractive for investors due to the recent correction, whereas its fundamentals indicate no negative impacts from macroeconomic conditions.
CRM’s major business segments (Service Cloud, Sales Cloud, and Marketing and Commerce Cloud) are getting stronger and generating most of its subscription and revenue growth. As per CRM’s management, the current total addressable market of nearly $284 billion and the revenue estimates signify the prevailing opportunity. Historically, Salesforce has surpassed the top and bottom lines’ expectations.
During the correction in 2022, Salesforce’s business operations integrated growth aspects indicated by enhanced market share during the downtrend. The Q1–2022 results represented outstanding revenue growth of 24% on a year-over-year (YoY) basis, exceeding the analysts’ expectations (19%). Whereas in Q2–2022, investors can expect a solid boost in earnings and revenue that will support and initiate a prolonged uptrend in CRM’s stock price.
CRM concentrates the value and opportunities of the digital transformation trend among enterprises and institutions. The analysts expect slow growth in CRM’s business operations with $7.69 billion in revenue for Q2–2022. Salesforce’s business models (related to SaaS and Customer Relationship Management) are evolving the industry standards constantly. Salesforce’s billings and booking figures will be the primary factors for investors to evaluate the potential of CRM’s business capabilities.
Analysts are expecting earnings to be $1.03 per share for the quarter, representing the deteriorating effect of prevailing market conditions as compared to the Q2–2021 level of $1.48 per share with $6.34 billion in revenue. Annual earnings are expected to decrease by 0.7% YoY to $4.75 per share with $31.77 billion in revenue (indicating a 19.8% enhancement).
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Analysis
CRM has formulated a broader accumulation phase between $155 (primary support) and $195 (primary resistance). Over $195, the stock could be in a prolonged mark-up phase. However, $215 has emerged as a vital resistance to the uptrend.
As per RSI, there is a lack of solid indication for long positions, but it represents considerable buying near $170. CRM is well positioned for the bulls ahead of the earnings report.
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Despite experiencing severe competition from Workday and Snowflake, Salesforce will remain the leader in the digital transition as long as companies highly prefer the brand and its products to solve their complex business problems. Fundamentally, CRM has no signs of losing its competitive edge. It can initiate a solid uptrend momentum with the Q2–2022 earnings report.
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Written by Anuj Sharma for ToroAlerts, LLC
ToroAlerts is implementing artificial intelligence in investing and trading, using machine learning algorithms with predictive technical analytics to optimize portfolio returns.
