Salesforce Stock Gains Momentum as Analysts Raise Price Targets

Evercore ISI backs Salesforce stock as subscription revenue and margins grow By Investing.com

On Thursday, Evercore ISI maintained its optimistic stance on Salesforce.com (NYSE:CRM) stock, sustaining an Outperform rating with a $300.00 price target. The firm's analysis acknowledged Salesforce's strong performance in the second quarter, which indicated a recovery from the previous quarter's underwhelming results. The company's subscription revenue grew by 9.5%, slightly surpassing the anticipated 8.5%, and the current remaining performance obligation (CRPO) growth of approximately 10% exceeded the expected 9%. Salesforce's guidance for the third quarter's CRPO growth is around 9%, which is consistent with market expectations, factoring in a roughly $100 million foreign exchange tailwind. Despite concerns about the projected acceleration in fourth-quarter subscription revenue, the company's emphasis on solid execution and steady demand for its core products supports its positive outlook. The upcoming Dreamforce 24 event is set to provide further insights into Salesforce's growth strategy, particularly concerning the new AgentForce tool and its potential to enhance average revenue per customer through AI integration. Management has observed continued trends over the past two years, including longer deal cycles and heightened scrutiny of deals incorporated into forward guidance. However, slower growth is not seen as an indication of market saturation but rather a reflection of current macroeconomic conditions. The company remains hopeful for a return to growth rates above 10%. Furthermore, Salesforce has improved its margin guidance to approximately 32.8%, a slight increase due to recent margin outperformance. The company aims to balance cost discipline with investments in AI and AgentForce. This focus on financial prudence is also evident in Salesforce's forecasted operating cash flow growth of 23-25% and free cash flow growth of 25-27%, underscoring a strategic approach to capital deployment. Evercore ISI's recent endorsement of Salesforce.com (NYSE:CRM) is further substantiated by real-time data and insights from InvestingPro. Salesforce's robust financial health is underscored by a Gross Profit Margin of 76.0% in the last twelve months as of Q1 2023, highlighting the company's efficiency and strong market position. This aligns with one of the InvestingPro Tips, which praises Salesforce's impressive gross profit margins. Additionally, the company's notable P/E Ratio of 45.97 reflects its high earnings multiple, which can be a sign of investor confidence in its future growth prospects. The InvestingPro Tips also point out that Salesforce is a prominent player in the Software industry, with analysts predicting profitability for the year. This aligns with the company's strategic initiatives and investments in AI and new tools like AgentForce, which are expected to drive future growth and profitability. InvestingPro offers more insights into Salesforce's financial performance and strategic positioning, with a total of 11 additional tips available for those interested in a deeper analysis. These tips, along with other metrics such as the company's market cap of $250.87 billion and revenue growth of 11.04% over the last twelve months, provide investors with a comprehensive view of Salesforce's potential. For more detailed tips and metrics, visit https://www.investing.com/pro/CRM.

Salesforce stock price target raised on modest growth rebound By Investing.com

On Thursday, Loop Capital adjusted its price target for Salesforce.com (NYSE:CRM) shares , increasing it to $270 from the previous $240, while maintaining a Hold rating on the stock. The decision follows Salesforce's reported improvement in its current Remaining Performance Obligations (cRPO) growth, which measures the future revenue under contract that has not yet been recognized. The growth rate hit 11% year-over-year in constant currency terms, surpassing both the firm's and the Street's expectations of 9% and 10%, respectively. Despite a lackluster first quarter in bookings, Salesforce has seen a modest rebound in cRPO growth. This uptick has been partly attributed to early renewals, which have acted as a tailwind. Nonetheless, the company's management has signaled a continued cautious purchasing environment and has offered a conservative cRPO growth forecast of 9% year-over-year for the third quarter. Salesforce's Data Cloud business, a critical component of its GenAI solutions, has been performing strongly, yet the company's overall growth remains around 10%. To boost its growth prospects, Salesforce has announced the Agentforce platform, which is set to be fully introduced at the upcoming Dreamforce event. Agentforce is notable for its consumption-based pricing model, which charges per conversation or transaction. The adoption of Salesforce's GenAI products, including its Copilot offerings, is expected to be gradual due to their significant pricing premium, which ranges from $60 to $120 per user per month. The new consumption pricing model for GenAI agents is anticipated to facilitate faster adoption within Salesforce's existing customer base by reducing the need for a substantial initial investment. While Salesforce's GenAI products and Data Cloud are key to achieving double-digit growth, Loop Capital will continue to monitor the company's progress in these areas. The firm's increased price target to $270 reflects slightly higher cash flow estimates, yet it awaits more definitive signs of acceleration in business trends driven by GenAI deals before altering its Hold rating. In other recent news, Salesforce.com has seen several financial firms adjust their price targets following robust second fiscal quarter results. Oppenheimer raised the price target for Salesforce to $300, noting the company's record operating margin and an upward revision of its fiscal year 2025 operating margin and cash flow projections. Similarly, Baird increased its price target to $315, pointing out the company's revenue and profitability surpassing expectations. Wells Fargo (NYSE:WFC) also adjusted its outlook, raising the price target to $275, acknowledging the company's resilience in core segments and the improvement in operating margins. Moreover, Salesforce announced a change in their Chief Financial Officer (CFO) position, a development that might influence future revenue growth and business efficiency. Analysts from Edward Jones, Goldman Sachs (NYSE:GS), and Stifel maintained a positive outlook on Salesforce, with Goldman Sachs and Stifel raising their price targets to $325 and $320 respectively. Salesforce's commitment to artificial intelligence (AI) has been a key factor in recent developments, with the company signing 1,500 AI deals in the second fiscal quarter. This strategic focus on AI is reflected in the year-over-year paid customer growth of more than 130% in its Data Cloud segment. The company's growth strategy for fiscal 2025 projects a revenue range of $37.7 billion to $38 billion, with an anticipated 8-9% year-over-year growth and a non-GAAP operating margin improvement of 230 basis points. This projection is supported by firms such as Edward Jones, which highlighted Salesforce's potential for above-average growth due to the expanding digital capabilities of companies across various sectors. As Salesforce.com (NYSE:CRM) continues to navigate the competitive landscape of the Software industry, the company's financial health and market performance offer valuable insights. With an impressive gross profit margin of 76.0% in the last twelve months as of Q1 2023, Salesforce demonstrates its ability to maintain profitability amidst industry challenges. This is further underscored by the company's perfect Piotroski Score of 9, indicating strong financial positioning. Investors should note Salesforce's high earnings multiple, with a P/E ratio of 45.97, suggesting a premium market valuation. However, this is coupled with a substantial market capitalization of $250.87 billion, reflecting the company's prominence as a leading player in its sector. For those seeking additional analysis, InvestingPro offers further tips, including Salesforce's ability to sufficiently cover interest payments and its moderate level of debt, which contribute to its financial stability. For a more comprehensive understanding of Salesforce's potential and to access a full suite of InvestingPro Tips, interested parties can explore the product that includes additional tips, with a total of 11 tips available for Salesforce.com.

Edward Jones maintains Buy on Salesforce stock amid growth outlook By Investing.com

Edward Jones, a financial services firm, maintained a Buy rating on Salesforce.com (NYSE:CRM), highlighting the company's strong position in the customer relationship management (CRM) software market. The firm's analyst underscored Salesforce's potential to achieve above-average growth due to the expanding digital capabilities of companies across various industries. Salesforce's comprehensive product suite is designed to cater to the needs of large corporate customers, which is expected to support favorable pricing and a reduced rate of customer churn. The analyst from Edward Jones expressed confidence in Salesforce's experienced leadership team, which has a proven record of delivering consistent returns to shareholders. In the view of Edward Jones, the software industry, where Salesforce operates, is poised to continue its trajectory of above-average growth. The industry trend, combined with Salesforce's market-leading position and product strategy, suggests that the company's shares are currently undervalued. The analyst's statement reflects a positive outlook on Salesforce's future performance, anticipating that the company will leverage its expansive product offerings and market leadership to sustain growth. According to recent financial reports, the company's fiscal 2025 second-quarter results showed a revenue increase to $9.33 billion, marking an 8% year-over-year growth. Their subscription and support revenue saw a 9% rise year-over-year. Analysts from Evercore ISI, Goldman Sachs (NYSE:GS), and Stifel have all maintained a positive outlook on the company. Evercore ISI emphasized Salesforce's strong second-quarter performance and an impressive subscription revenue growth of 9.5%. Goldman Sachs, which raised its price target to $325, highlighted Salesforce's consistent top-line guidance and its strategic position in AI development. Stifel also raised its price target from $300.00 to $320.00, indicating confidence in Salesforce's focus on AI solutions. One of the company's focal points is its Agentforce platform, which is expected to enhance revenue through AI integration. Salesforce's AI development has led to the signing of 1,500 AI deals in the second fiscal quarter and a year-over-year paid customer growth of more than 130% in its Data Cloud segment. The company is projecting a revenue range of $37.7 billion to $38 billion for fiscal 2025, anticipating an 8-9% year-over-year growth and a non-GAAP operating margin improvement of 230 basis points. Recent data from InvestingPro enriches the analysis provided by Edward Jones, aligning with the positive sentiment towards Salesforce.com (NYSE:CRM). Salesforce boasts a robust market capitalization of $250.87 billion, underscoring its significant presence in the CRM software market. The company's impressive gross profit margin of 76.0% for the last twelve months as of Q1 2023 further validates Edward Jones's confidence in Salesforce's pricing power and customer retention capabilities. InvestingPro Tips highlight Salesforce's perfect Piotroski Score of 9, which indicates strong financial health, and the company's ability to generate cash flows that can sufficiently cover interest payments, suggesting financial stability. Additionally, analysts predict that Salesforce will be profitable this year, which is consistent with the company's profitability over the last twelve months. These factors contribute to the view that Salesforce's shares may be undervalued, aligning with the growth potential identified by Edward Jones. For investors seeking a deeper dive into Salesforce's metrics and additional strategic insights, InvestingPro offers a comprehensive list of 11 tips, available at https://www.investing.com/pro/CRM, which could further inform investment decisions.