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On Thursday, BMO Capital Markets adjusted its outlook on Salesforce.com shares (NYSE:CRM) by reducing the price target to $367 from the previous $375 while maintaining the Outperform rating. With the stock currently trading at $307.33 and a market capitalization of $294.11 billion, InvestingPro analysis suggests the company is currently undervalued. Analysts at BMO Capital expressed a continued bullish stance on the company’s stock, despite acknowledging a slight reduction in their estimates.
The analysts remarked on Salesforce’s recent performance, noting that the company delivered a solid yet unspectacular earnings report. They highlighted that the year-over-year growth in calculated billings and free cash flow for the January quarter exceeded their forecasts. The company maintains impressive gross profit margins of 76.94% and achieved revenue growth of 9.53% over the last twelve months. Additionally, the forecast for fiscal year 2026 subscription revenue growth of 9% year-over-year on a constant currency basis met their expectations.
However, BMO Capital pointed out that subscription revenue growth for the January quarter was slightly below their projections and that the overall revenue guidance for fiscal year 2026 was somewhat underwhelming. Despite these minor setbacks, the firm’s analysts remain confident in the potential of Salesforce’s Data Cloud and Agentforce offerings.
The price target adjustment was described as a minor tweak, reflecting the modest lowering of their estimates. BMO Capital’s analysts concluded their commentary by reaffirming their positive outlook for Salesforce stock, indicating their belief in the company’s ongoing opportunities for growth and innovation.
In other recent news, Salesforce has reported robust fourth-quarter results, exceeding profit estimates and showcasing significant growth in its Data Cloud and AI annual recurring revenue, which increased by 120% year-over-year. The company secured over 3,000 new deals for its Agentforce product, contributing to a substantial rise in its cloud services. Despite these achievements, Salesforce provided a more conservative revenue outlook for fiscal year 2026, citing foreign exchange fluctuations and underperformance in legacy products as key factors. Analysts from Truist Securities, Piper Sandler, and Scotiabank (TSX:BNS) have all adjusted their price targets to $400, maintaining optimistic ratings on the stock due to its potential in AI monetization and operational efficiencies.
KeyBanc Capital Markets, while maintaining an Overweight rating with a $440 price target, noted mixed results in Salesforce’s performance metrics but remains confident in the company’s growth potential. Needham analysts also upheld a $400 price target, emphasizing Salesforce’s impressive operational efficiency and the positive impact of early renewals on its performance obligations. The recent analyst commentary highlights the strategic importance of Salesforce’s Agentforce and Data Cloud products, with expectations that these will drive future growth.
Overall, while Salesforce’s revenue guidance for fiscal year 2026 was conservative, analysts see potential upside from AI opportunities and improved operational efficiency. The company’s strategic focus on enhancing its product offerings and market reach is expected to support its financial outlook, with analysts recommending buying the stock on any pullback.
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