Analyst Note| Dan Romanoff, CPA |
We are raising our fair value estimate for wide-moat Salesforce to $292 per share, from $273, based on quarterly strength and higher guidance, and continue to see shares as undervalued. The company reported strong fiscal second-quarter results, including upside to both revenue and non-GAAP EPS guidance. Salesforce’s third-quarter revenue guidance was robust while full-year targets were raised once again. The Slack acquisition closed in the waning days of the quarter and did not have a material impact on results. Management remains bullish on the pipeline when viewed from any angle and believes margin improvements are sustainable after normalizing for recent acquisitions. Customer conversations continue to grow increasingly strategic, which continues to drive larger deals.