Salesforce shares rise on strong results, forecast

* Shares rise 13 percent

* Analysts raise price targets

* Some worry about high valuation

NEW YORK, Aug 20 (Reuters) - Shares in Inc CRM.N rose 13 percent on Friday after the "cloud computing" software services company reported stronger-than-expected results and raised its forecast for the year.

Wall Street analysts, encouraged that the company was showing strong growth despite fears of a slowdown in Europe, raised their price targets on the shares. A few warned that their valuations were high, but many said the company’s prospects validated a premium.

Salesforce competes with SAP AG SAPG.DE, Microsoft Corp MSFT.O, Oracle Corp ORCL.O and NetSuite Inc N.N in "cloud computing," a technology that enables businesses to run software applications on remote servers, allowing them to save space, energy, and hardware costs.

“’s Q2 was highlighted by accelerating revenue and billings growth, which we believe should cause the stock to continue to make new highs over the next few quarters,” said Wedbush Securities analyst Michael Nemeroff. He raised their price target to $112 from $108.

The shares were trading at around $109.25 by late morning, after hitting a lifetime high of $109.93.

Stifel Nicolaus analyst Tom Roderick maintained a buy rating and raised the price target to $110 from $95.

The company reported second-quarter earnings, excluding items, of 29 cents per share, 2 cents ahead of the average analyst estimate. Revenue rose 25 percent to $394 million, beating Wall Street’s forecast for $384.8 million.

The company forecast stronger-than-expected third-quarter revenue and profit, and raised its forecasts for the year.

Some analysts were cautious about the shares’ high valuation. Signal Hill analyst Richard Baldry said the shares trade around 7.3 times run-rate revenue, a premium to the average among its peers of around 4.6 times.

(Reporting by Ritsuko Ando. Editing by Robert MacMillan)

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