Monday, May 9, 2011

SuccessFactors, Inc. (NASDAQ: SFSF) Q3 2011 Price Target

Recent price: 33.52$
P/E Ratio: -
3 Months Target Price: 40$

Company Description
SuccessFactors, Inc. is a provider of cloud-based Business Execution Software (BizX) solutions to organizations of all sizes. The Company offers a suite of Business Execution Software applications, delivered over the Internet, that enable organizations to optimize business alignment and the performance of their people to drive business results. The Company markets different editions of its application suite, which include enterprise, mid-sized business, small business and emerging business. Enterprise edition provides functionality and configurability that can scale to support the needs of global enterprises with tens to hundreds of thousands of employees. In mid-sized business, the Company offers SuccessPractices. Each of the SuccessPractices modules is pre-configured with workflows form templates and other content personalized for the needs of mid-sized organizations and designed to allow for implementations. In the small business, the Company offers professional edition. Professional edition includes modules pre-configured with the practices of smaller organizations. In the emerging business, the Company offers its express edition. Express edition is a Web-based system that can be rolled out without implementation support.

Confidence Margins
Strong resistance $45 (+34%)
Light resistance $40.44 (+21%)
Light support $32.08 (-4%)
Strong support $27.79 (-17%)

SuccesFactors Inc. reported decent performance for the first quarter of 2011, but the company is still unprofitable. The acquisition of a long position right now is a good bet and will prove to be profitable. Support levels are pretty close so one will have to keep an eye on the position for it not to turn sour.

Entry strategy
For the cautious investor:
Buy the stock for 34$ or less.

For the risk-taking trader:
The September 2011 35$ out-of-the-money call option contract seems to be the right position to take, they can be acquired for about 310$ per contract.

Exit Strategy
For the cautious investor:
Sell when the stock reaches $40, or keep it until 45$ if you are more bullish in your own analysis.

For the risk-taking trader:
The contracts should be kept until the underlying reaches around 40$. This should provide a satisfactory return if the underlying reaches the target price as the contracts will get in the money.

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