Seeking Alpha
Long only, contrarian, special situations, value
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Synopsis: About three weeks ago I penned an article about Salesforce as part of SeekingAlpha’s “One Stock” feature. I was pleased by the amount of comments the article generated. As I was advocating shorting the stock, some of the comments were quite terse, as one would expect when one espouses an opinion against owning a very popular stock. The stock is slightly down since the article ran. As Salesforce (CRM) is due to report earnings after the bell tonight, I thought it might be beneficial to look at how others are valuing the stock, both from mainstream and less known services.
Value Engines: Has stock appealing to momentum investors, but has fair value pegged at $66.73 currently.
Morningstar: This service loves CRM’s business model and potential for growth and believes the operating margins will increase going forward. However, it is concerned that the space is drawing additional completion and stock price has gotten way ahead of fundamentals. Morningstar’s current price target is $58.
Marketgrader: No price target but has “Hold” on equity mainly due to Profitability and Price Trend.
S&P: Citing growing competition’s likely impact to CRM’s growth rates and concerns over valuation, S&P has hold on stock and price target of $82.
Credit Suisse: Although positive on the prospects for international growth and the launch of “Chatter”, has neutral rating on stock with price target of $70.
The Street: What would a momentum/story stock be without a pump from Cramer? The Street has a buy on stock with price target of $127.25; which would be over 100 times this year’s earnings.
Although I think CRM will exceed earnings estimates this quarter as they did a good job sandbagging guidance at the last earnings call, any bump up is likely to be short lived as valuations are just too stretched as this point, in our opinion.



Disclosure: Short CRM

Source: Just How Overvalued Is Salesforce.com?