Salesforce (CRM) is expected to beat estimates for Q1 as feedback from its partners suggested that deal activity remained healthy, BofA Securities said in a note Wednesday.
The firm said it expects Salesforce to report a 1 percentage point upside to its current remaining performance obligation, or cRPO, growth estimate of 12% and “some upside” to its earnings estimate of $2.37 per share for Q1. The company is scheduled to report its Q1 financial results on May 29.
The company’s solid pipeline builds confidence in potential growth and supports cRPO growth outlook for Q2, BofA added.
“We expect management to flow through Q1 upside to the outlook for [fiscal year] 2025 subscription growth and margin of above 10% [constant currency] and 32.5%,” according to the note.
The firm said the company was meeting its partners’ expectations overall with a higher mix indicating better than expected results. Strong performance was noted in industry clouds, data cloud pilot deals and marketing cloud, according to the note.
“As the leader in the large customer relationship management industry, we believe the company can gain share and outpace industry growth,” the firm said, quoting research and consultancy firm Gartner.
BofA said subscription reacceleration driven by contributions from the data cloud business is a potential catalyst for company shares rerating higher, as they are currently valued relatively low compared to the expected free cash flow growth.
BofA maintained its buy rating on the company’s stock and kept the price objective at $360.
The company’s shares were up 2.5% in recent trading.