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Salesforce.com Leads Software Stocks’ Harmony Up; Even Tableau Hums

The morning bell became music to the ears of software stock investors Thursday as Wall Street used Salesforce.com’s Q4 strength and outlook to harmonize. Salesforce.com ( CRM ), an enterprise cloud pioneer and the No. 1 maker of customer relationship management software, sang soprano, its stock gapping up 11% as soon as the conductor raised the baton on the morning after its upbeat earnings report late Wednesday. Rival SAP ( SAP ) was up 1.6% in early trade in the stock market today . Fellow enterprise software stocks Ultimate Software ( ULTI ) rose 2%, ServiceNow ( NOW ) 2.8% and Manhattan Associates ( MANH ) nearly 1%. The harmony extended to database choir: Legacy leader Oracle ( ORCL ) rose a fraction, Qlik ( QLIK ) 2.7%, Splunk ( SPLK ) 3.9% and Hortonworks ( HDP ) 1.8%. Workday ( WDAY ) leapt 5% despite a lowered price target from Wedbush. Even Tableau Software ( DATA ) was up as much as 3.5% early Thursday. Tableau stock collapsed 49.5% on Feb. 5 after the company issued soft Q4 results and an outlook of slower growth, sending the entire enterprise software sector into a tailspin. “Slowdown? What Slowdown?” asked FBN analyst Shebly Seyrafi in a Thursday research note, citing “600 seven-figure deals” signed by Salesforce.com during Q4. Salesforce set off a sectorwide rebound, but will it last? By midday, Salesforce had eased to an 8% gain, near 67.50. Most of the other stock also had eased, but remained up. Hortonworks, though, was down more than 1% and Manhattan and Splunk were down a fraction. Canaccord Genuity maintained its buy rating, but without explanation lowered its price target on Salesforce stock to 88 from 95 while praising the company. FBR, too, reportedly lowered its price target, to 82 from 88, but maintained its outperform rating. “We have pushed back against the pessimism that has permeated investors’ imaginations for the past 50 days,” wrote Canaccord analyst Richard Davis in a research note issued Thursday morning. “Salesforce decisively demonstrated that the world is far from ending, and for well-run, well-positioned companies with talented salespeople, growth is still coming in large chunks. “There was literally nothing wrong with this quarter’s print or longer-term outlook. We believe the stock’s 9% after-hours (Wednesday) pop is just the beginning of a year in which the stock delivers price appreciation that is materially better than the overall stock market.” For its fiscal Q4 ended Jan. 31, Salesforce said adjusted EPS rose 36% to 19, matching analyst consensus, on revenue up 25% to $1.81 billion vs. Wall Street’s $1.79 billion model. For fiscal Q1 2017, Salesforce expects adjusted EPS of 23-24 cents, up 47% at the midpoint and ahead of analysts’ 21-cent estimates, on sales up 25% to $1.89 billion, whereas analysts expected $1.86 billion. Brian Wieser, an analyst with Pivotal Research, noted that deferred revenue growth was up 29% in Q4, foreshadowing sales to come. “By segment, Marketing Cloud was up by 31%,” he wrote in a Thursday research note. “App Cloud and other (formerly the Platform segment) was up by 43%, Services Cloud was up by 35% and the flagship Sales Cloud was up by +12%. “Commentary about activity in the most recent quarter included reference to the company’s signing of a new nine-figure transaction as well as a renewal of another large customer, also with a nine-figure sum.” Image provided by Shutterstock .

Salesforce.com Meets And Beats On Q4, Stock Jumps On Outlook

Salesforce.com ( CRM ) matched analyst forecasts on earnings and beat them on revenue with a record fourth quarter, but shares soared in late trade after the enterprise cloud pioneer raised its forecast for sales growth. Announcing earnings after the market close Wednesday, Salesforce said adjusted fourth-quarter earnings rose 36% to 19 cents per share on revenue that rose 25% to $1.81 billion. Earnings were right on the money, according to estimates from analysts polled by Thomson Reuters, but sales were better than the $1.79 billion revenue they had anticipated. The No. 1 developer of customer relationship management software, Salesforce raised full fiscal 2017 revenue guidance to a range of $8.08 billion to $8.12 billion, up from $8.0 billion to $8.1 guided after its third-quarter release. For its first fiscal quarter of 2017, which ends in April, Salesforce said it expects earnings per share of 23-24 cents, up 47% at the midpoint and ahead of analysts’ 21-cent consensus view. That’s on revenue up 25% to $1.89 billion, where analysts expected $1.86 billion, up 23%. Its results seemed to strengthen hope that Salesforce might trigger an upturn in software stocks, reversing  Tableau Software ‘s ( DATA ) profitable but softer fourth quarter and weak guidance that triggered a 49.5% collapse in Tableau stock Feb. 5. Tableau’s misfortune also precipitated a 15% plunge in the entire IBD Computer Software-Database industry group, where legacy software developer Oracle ( ORCL ) also resides. Salesforce stock also fell 13% at the time, and the IBD Computer Software-Enterprise industry group where it lives fell 8%. Neither group has recovered, the most notable exception being steady Oracle, up slightly Wednesday to 36.63, 19% off a six-month high set June 17. Days after the Tableau debacle, Salesforce set a 16-month low at 52.60 on Feb. 8, before rising 19.5% through Tuesday’s close at 63.98.  Salesforce ended the regular session down 0.6% to 62.50  in the stock market today . That was 24% off the stock’s all-time high of 82.90, hit Nov. 19, when Salesforce reported fiscal-third-quarter earnings up 50%. After Wednesday’s earnings release, Salesforce jumped more than 8% to 67.95 in after-hours trading. “By any measure, this was a spectacular finish to the year with 27% revenue growth in constant currency for the fourth quarter and for the full year,” Chief Executive Marc Benioff said in the earnings release. “We are raising our fiscal year 2017 revenue guidance to $8.12 billion at the high end of our range — unprecedented growth for a company of our size and scale.” Chief Financial Officer Mark Hawkins said its adjusted operating margin rose by 177 basis points, driving full-year operating cash flow up 37% to $1.6 billion during the fourth quarter. Said President and Chief Operating Officer Keith Block: “We hit an all-time high in large transactions in fiscal 2016,” adding that Salesforce’s cloud platform is growing sales “across every region, every cloud and every industry.” For full fiscal 2016, revenue rose 24% to $6.67 billion where analysts expected $6.65 billion. Salesforce said subscription and support revenue grew 24% to $6.21 billion and professional services and other revenue rose 28% to $462 million. The full-year adjusted earnings matched Wall Street at 75 cents. Salesforce managed to take a fourth-quarter unadjusted loss of 4 cents, better than the 6-cent loss expected by Wall Street. Beyond predicting Salesforce’s first $8 billion year in fiscal 2017, Benioff repeatedly assures that the company is “well on the path to reach $10 billion faster than any other enterprise software company.” RBC Capital Markets analyst Ross MacMillan said in a recent note to clients that the firm’s Salesforce1 platform for mobile-application development is driving fresh growth, although “there are many avenues to sustain growth, including service and marketing, the platform, and international and future initiatives.” MacMillan went on to say: “We think Salesforce can continue to drive premium growth for its size, and it remains an important strategic asset.” RBC maintains an outperform rating on Salesforce.com stock, with a price target of 80, as “one of the best positioned companies in large-cap software.” Image provided by Shutterstock .

Palo Alto Networks Nabs Cisco, Juniper Market Share … Again

Palo Alto Networks ( PANW ) last quarter again nabbed market share from rivals  Cisco Systems ( CSCO ), Check Point Software Technologies ( CHKP ) and Juniper Networks ( JNPR ), a Piper Jaffray analyst wrote Monday ahead of Palo Alto’s fiscal Q2 earnings late Thursday. In a survey of third parties selling Palo Alto products, half said Palo Alto is most consistently beating out Check Point, Piper Jaffray’s Andrew Nowinski wrote in a research report. “Cisco, Check Point and Juniper have consistently been called out by resellers as the vendors most frequently losing to Palo Alto,” he wrote. “These are also the top vendors in the firewall market, suggesting Palo Alto continues to gain share at the expense of all the major vendors in the space.” That’s sure to rile Cisco, which last week  unveiled a next-generation firewall in direct competition with Palo Alto, Check Point, Fortinet ( FTNT ) and Intel ( INTC )-owned McAfee. It was also the first time that Check Point was cited as the vendor Palo Alto beats most often, Nowinski wrote. Nowinski retained his rating on Palo Alto Networks stock to overweight, with a 208 price target. At least three other analysts, however, cut their price target on Palo Alto stock Monday ahead of the Thursday earnings report. Sales, EPS Seen Decelerating Palo Alto stock was up 1% in afternoon trading on the stock market today , but rival  FireEye ( FEYE ) was up 9%. FireEye announced Hewlett Packard Enterprise ( HPE ) as its global alliance partner of the year. For fiscal Q2 ended in January, Palo Alto Networks is expected to report $318.3 million in sales and 39 cents earnings per share ex items, up 46% and 105%, respectively, vs. the year-earlier quarter. It would be its first quarter eclipsing the $300 million-mark. But sales and EPS minus items are expected to decelerate for the second consecutive quarter, according to the consensus of 40 analysts polled by Thomson Reuters. The consensus model is in line with Palo Alto’s earlier guidance for $314 million to $318 million and 38 cents to 39 cents. Palo Alto stock is down 28% this year, slightly worse than IBD’s 25-company Computer-Software Security industry group, which is 24% off its 2015 closure. Cybersecurity stocks were pounded in January on a perceived slowdown in spending after gloomy reports from firms like Tableau Software ( DATA ) and LinkedIn ( LNKD ). Neither Nowinski nor Dougherty analyst Catharine Trebnick see that slowdown for Palo Alto. Trebnick maintained her buy rating and 215 price target on Palo Alto stock. She urged investors to compare Palo Alto to direct next-generation firewall vendors. Firewall Vendors Outperform Peers Barracuda Networks ( CUDA ), CyberArk Software ( CYBR ), Proofpoint ( PFPT ), Imperva ( IMPV ), Rapid7 ( RPD ), Qualys ( QLYS ), Splunk ( SPLK ) and FireEye “have provided a seemingly negative read-through for Palo Alto Networks,” Trebnick wrote in a research report. “Unlike elsewhere in security, next-generation firewall vendors that cater to enterprises have all managed to produce good enough results for investors.” Trebnick expects Palo Alto to beat consensus expectations. Wildfire and Traps are driving higher attach rates, she wrote. Wildfire is Palo Alto’s cloud-based malware-analysis system, which competes with FireEye. Traps is an endpoint-security product. Over the past 12-16 months, Palo Alto has expanded its suite of products to seven from four, Trebnick wrote. Together, Palo Alto touts them as a “next-generation security platform.” “Our sources have indicated that they are now seeing increased success from this approach as enterprises are broadening their purchases to include more of the auxiliary software subscriptions,” she wrote. Trebnick and Nowinski alike see a strong April-quarter pipeline for Palo Alto. Nowinski said he expects a 3%-4% upside to Q3 guidance despite typical seasonal weakness.