Citi Ups Rating To Buy on Valuation (CRM) shares are trading higher this morning after Citigroup’s Brent Thill raised his rating on the stock to Buy from Hold, while maintaining a $70 price target. Thill notes that the stock had dropped 13 percent in the three days after the company reported earnings, “even after short-covering.” He notes that the company trades at 24.1 times calendar 2009 free cash flow per share, a reasonable valuation given expected 30 percent annual growth through 2010. He also notes that September and October are seasonally the strongest months for CRM’s stock. Thill notes that the stock trades at about 4.4 times enterprise value/sales, only a slight premium to the median enterprise software multiplier of four, despite expected 2009 revenue growth of 34 percent, versus 11 percent for the group.

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