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Salesforce: A force to reckon with post earnings report?

Written by Dennis Mwenga

Salesforce.com, inc. (CRM) is a tech company based in San Francisco with a market capitalization of $190.22B USD. Salesforce specializes in offering cloud computing solutions, specifically the creation of customer relationship management (CRM) software applications that cater to its customers in the financial services, healthcare, life sciences, manufacturing, and other industries. The services offered by CRM software applications include sales to store data, monitor leads and progress, forecast opportunities, analytics to help gain insights and relationship intelligence.

In Salesforce’s latest earnings report for fourth-quarter fiscal2022 EPS were 0.84 cents pbeating estimates of 0.73 cents. Quarterly revenues were $7.33B, +26% up YoY, surpassing the forecast estimate of $7.23B. This was clearly an indication that Salesforce is one of the companies that has greatly benefited from a robust demand environment because customers have been undergoing a major digital transformation since the start of the Covid-19 pandemic.

https://www.zacks.com/stock/chart/CRM/price-consensus-eps-surprise-chart?icid=chart-CRM-price-consensus-eps-surprise-chart
https://www.zacks.com/stock/chart/CRM/price-consensus-eps-surprise-chart?icid=chart-CRM-price-consensus-eps-surprise-chart

Recently Salesforce unveiled a product known as ‘churn prediction AI’ whose purpose is to enable telcos that use its Communications Cloud to detect when a customer is likely to change his or her carrier. This is good for Salesforce users because currently, the market is having a challenging time predicting when a customer might shift to another carrier. Telcos usually want to retain as many customers as possible.

Churn prediction AI source-https://www.techtarget.com/searchcustomerexperience/news/252514018/Salesforce-releases-Tableau-CRM-telco-churn-prediction-AI

Furthermore, Salesforce is partnering with AWS (Amazon web services) to rollout video streaming services that enable streamers to personalize content recommendations with Artificial Intelligence as well as run viewer analytics, collect feedback, analyze it, and manage subscription lifecycles.

According to Zacks investment research based on 28 wall street analysts as seen on tipranks.com, the Salesforce’s average price target is $303.19 with a high forecast of $375.00 and a low forecast of $225.00. The average price target represents a 57.00% change from the last price of $193.12.

Technically, SalesForce Price action on the daily timeframe is trading in a Downtrend Channel pattern and the 200-day SMA (blue), 50-day SMA (Red) and 21-day SMA (Green) are aligned lower indicating that price is in an overall downtrend, on the longer timeframe chart. MACD signal line and  histogram are currently holding below the 0-line, indicating that downside momentum is pretty strong. The RSI is at 48 and currently rising, the daily Average True Range (ATR) is 8.38, and the ADX-21 is below the 25.00 level implying that the price is currently finding resistance at $206.78 having bounced from $184.57. Expect resistance at $206.78 and $217.48.

About the author

Dennis Mwenga

Dennis Mwenga has worked as an independent trader and educator since 2016. His love for the global financial markets grew as a result of his Bachelor of Laws degree and specialization in commercial law and international trade, which drove him to pursue the Chartered Market Technician (I) program in order to build skills for better investment decisions. As a devoted educator, he was encouraged to contribute to an educational series called 222 Days of Foreign Exchange Trading and later co-author a book on the subject, which drove him to seek a career as a mechanical and automated trading systems trainer. He has also organized and hosted financial markets trading educational podcasts and webinar series, in which he interviewed renowned traders, trading mentors, and fund managers with decades of expertise trading a variety of assets in the financial markets.

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