- Citigroup is upgrading salesforce.com (NYSE:CRM) to Buy from Hold with a $70 tgt based on:

1) valuation – stock down 13% in 3 days since earnings, even after short-covering; trades at 24.1x CY09 FCF/share vs. 30% 3-yr CAGR (CY07-10);

2) 2H seasonality – Sep. & Oct. are historically strongest months for CRM stock (+18% & +14%
avg. in 2004-2007); also, big deal pipeline bodes well for 2H bookings.

Firm notes CRM’s CY09 EV/S of 4.4x is only at a slight premium to median of 4.0x for the sub-group of enterprise software co’s within their coverage universe, despite having a CY09 rev growth of 34% that is more than 3x the sub-group’s 11% median and boasting a more predictable subscription model.

August has historically been one of the best months to buy CRM stock as it is followed by the 2 strongest months. On average during 2004-2007, Sep.-Oct. has returned gains of 34%. The next major catalyst is likely CRM’s annual Dreamforce user conference, which is scheduled for Nov. 3-5, right after the close of FQ3 (Oct.).

Notablecalls: This is a pretty solid call that will take the stock to $58+ in a jiffy. It's still down 10 bucks from last week. Anything below $57.50 is buyable this morning.