Bulls back Salesforce as company reports earnings

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As Salesforce's prepares to report first-quarter earnings, most Wall Street analysts are shrugging off speculation that the company is a takeover target, and are largely bullish on the stock.

Today, after the market close, analysts expect Salesforce to report first-quarter earnings-per-share of $0.14 on revenue of $1.5 billion, which would represent growth of 22.4 percent on the top line, according to FactSet.

Analysts also forecast that billings, an important metric in many software companies that measures customer demand, will hit $1.18 billion.

"The overall momentum for the business continues to be healthy," Samad Samana of FBR Capital Markets told CNBC. "However, the first quarter is a seasonally weaker period. Investors have likely factored that in, and are largely expecting inline to modest upside results."

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Salesforce is the leader in the $23 billion customer relationship management (CRM) market, according to research firm Gartner. CRM software allows organizations to manage, organize and track sales leads.

However, the San Francisco-based company's fundamentals have lately taken a back seat to headlines regarding M&A speculation. Specifically, there have been reports that Salesforce hired advisers to work with the company after an approach by a potential suitor.

Since April 29, when these reports surfaced, Salesforce's stock is up 5 percent, while both the and the Nasdaq are basically flat over that same time period. So far this year, the stock is up nearly 20 percent. Analysts at Barclays say that the M&A reports, and the subsequent jump in the stock price, potentially create downside risk for investors in the near-term. Morgan Stanley removed Salesforce from its Best Ideas list.

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Still, both firms continue to rate Salesforce the equivalent of a "buy." What excites the bulls? They point to strong revenue growth, continued traction with big corporate customers (Salesforce closed 550 seven- and eight-figure transactions in fiscal 2015, about 100 more than the prior year), and a diverse portfolio of apps including its service and marketing clouds.

Investors speculated on which tech giant might have knocked on Salesforce CEO Marc Benioff's door with possible takeout offers. Oracle, Microsoft and IBM were all talked about as potential suitors.

The team at Morgan Stanley says that, strategically, Salesforce is a very attractive asset but the size of such a deal, valued at $60 billion or higher, makes such a transaction extremely complicated with few viable bidders. They rate the chances of such a deal occurring as "low probability."

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Right now, it's difficult to find an analyst covering Salesforce who doesn't think the company is a smart bet. One of the few on the sidelines is Jack Andrews of D.A. Davidson & Co. While he applauds Benioff for establishing what he calls the most successful cloud computing software vendor, Andrews says the current valuation of the stock represents an already optimistic scenario. Moreover, he argues that the company's drive to $10 billion in revenues and beyond will become more challenging, and will require taking significant market share by displacing legacy software customer relationships.

"The growth will be harder to come by, and the stock is becoming more expensive," Andrews told CNBC.

Andrews is a minority on the Street: a full 80 percent of his colleagues currently rate the stock a "buy." Investors could have a better sense of who is right after the close Wednesday.