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What Led Salesforce to Register Record Highs?

Anne Shields

Why Did Salesforce Raise Fiscal 2016 Guidance Again?

(Continued from Prior Part)

Salesforce raised revenue guidance for the fourth time

Previously in the series, we discussed Salesforce’s (CRM) fiscal 3Q16 results. Salesforce once again beat analysts’ expectations on both revenue and EPS front. Apart from beating analyst expectations, the company also gave its investors another reason to cheer when it announced expectations for fiscal 4Q16 and for the full year 2016.

This is the fourth time that Salesforce, a company that offers cloud services, has raised its guidance for fiscal 2016. In contrast, other players in the enterprise software space like IBM (IBM), Oracle (ORCL), and Microsoft (MSFT) are finding it difficult to grow their revenues.

Salesforce expects fiscal 4Q16 revenue and EPS to be $1.78 billion-$1.79 billion and $0.18-$0.19 per share, respectively. Analysts expect the company to report revenue and EPS of $1.78 billion and $0.19 per share, respectively. For the full fiscal 2016, the company expects to generate revenue in the $6.6 billion to $6.7 billion range. The company expects to generate revenue of $8 billion to $8.1 billion in fiscal 2017 as against analysts’ expectation of $7.99 billion.

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Salesforce shares have soared by 30% in 2015 to date

On account of the company exceeding analyst expectations and raising its revenue forecast, its shares rose ~ 6% to $81.9 in after-hours trading on November 18, 2015, as the above share price chart shows. In 2015 to date, the company’s stock has risen by ~30%. In the past couple of quarters, Salesforce has been able to consistently beat analyst expectations, which has given its share price a strong boost. Not one to sell itself short, Marc Benioff, Salesforce’s founder, CEO, and chair, stated that Salesforce is set to grow “faster than any other enterprise software company in history.”

You can consider investing in the iShares US Technology ETF (IYW) to gain exposure to Salesforce. IYW invests ~1.4% of its holdings in Salesforce.

Continue to Next Part

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