Salesforce Prepares for Latest Earnings Call

The equity tends to outperform following earnings

Deputy Editor
Aug 23, 2022 at 11:24 AM
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Salesforce.com (NYSE:CRM) is slated to step into the earnings confessional after the close tomorrow, Aug. 24. Analysts are anticipating the blue-chip cloud concern to report fiscal third-quarter earnings of $1.02 per share on revenue of $7.69 billion. Below, we will explore CRM's previous post-earnings activity and performance to determine what we can expect next.

Over the last two years, the Salesforce.com stock has had a positive history of post-earnings reactions, finishing five of these eight next-day sessions higher. This includes a 9.9% pop in June. This time around, options traders are pricing in an 11.4% post-earnings swing for the security, which is slightly higher than the 8.9% move CRM averaged after its last eight reports, regardless of direction. 

Options traders' enthusiasm is contained ahead of the event, however, with the 9,150 calls across the tape near the session's halfway point accounting for almost double the intraday average. The most popular contract by far is the weekly 8/26 190-strike call, where new positions are being sold to open.

More broadly, short-term options traders are operating with a put bias. This is per Salesforce.com stock's Schaeffer's put/call open interest ratio (SOIR) of 1.14 that sits in the highest percentile of annual readings.

CRM is attracting analyst attention ahead of the event, with Jefferies yesterday cutting its price target to $250 from $260. Covering brokerages are overwhelmingly bullish on the security, with 24 of 28 recommending a "buy" or better, and the 12-month consensus price target of $243.35 standing at a 37.4% premium to the equity's current level of trading.

Last seen 0.5% lower at $176, Salesforce.com stock's pullback over the last few sessions is being kept in check by its 80-day moving average -- a trendline that rejected the equity multiple times over the course of 2022. In addition, the shares have found footing at the $175 level. Year-to-date, CRM is down 30.3%.

CRM Chart August 23

 

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