Jun 18th 2009: The recession has not changed the Salesforce.com
(NYSE: CRM) shareholder value proposition: namely, that delivery
of software on demand requires a lower up-front investment and
offers increased vendor accountability, with flexible
subscription pricing, among other benefits.
What the recession has changed is the rate of sales growth for
CRM, which is expected to slow to the 15-18% range in FY2009. In
short, CRM's customers have slowed software implementations, due
to the prolonged economic contraction. The First Call
FY2009/FY2010 EPS estimates for CRM are 60 cents to 79 cents.
That said, CRM's leadership position and scalability hold the
promise of much better days ahead for the company, once U.S.
economic growth resumes. Institutional investors recognize this,
and once it became clear that the financial crisis' acute danger
period ended in early spring, they began to add to their CRM positions, taking shares up to the $40-range, from about $25. And
with the stock performing well from a technical standpoint in the
last three months, the risk/return is tipped in favor of a Buy.
Stock Analysis: Salesforce.com is a moderate-risk stock. Consider
buying a 25% position in CRM now then buy another 25% in three
months, if U.S. and global economic conditions don't worsen
substantially. Under any circumstance, don't buy more than 50% of
your CRM position before October 2009. Sell/Stop Loss if you were
to buy shares in this company: $17.
Source: Joseph Lazarr Link
Related: CRM Marketing Consulting
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