TriggerPoint Research

In yesterday’s post, we discussed the retail sales numbers and how we were beginning to see quite a bit of weakness entering the department stores and clothing brands.  Our suspicions were proven founded as earnings from several retailers and more specifically, JC Penney (JCP) and Abercrombie and Fitch (ANF) would come in worse than expectations.  We saw JCP finish on the lows of the day down almost 20% and we witnessed ANF slip to -13.5% to finish off the trading session.

Salesforce.com (CRM) is expected to report earnings on 2/23/2012 after the close.  The consensus of the 42 analysts is currently at a strong buy rating.  On average, over the past 4 weeks and 3 months, analysts have been increasing their outlook on the security prior to earnings.  For this quarter’s earnings report, analysts will be looking for EPS of $0.40 and revenue of $624.09 million.  Company guidance will also be a key issue as analysts are expecting next quarter’s EPS and revenue of $0.36 per share and $663.50 million respectively.

For this particular earnings report, we will be looking to play the outsides.  CRM tends to have quite a bit volatility after earnings and there will be plenty of liquidity.  It will be much easier to take a position to the short side if we were to see a disappointment on either EPS or revenue as CRM rarely disappoints.  If there were to be a disappointment, we would look to try to sell instantaneously and on any bounce higher.  On a move lower, we anticipate encountering support at $115 – 118 and then again at $110 – 111.  If we break these levels look for $105 to be a last-ditch level.