Wang & Lee Group board approves 250-to-1 reverse share split
On Tuesday, Citi analyst Tyler Radke adjusted the price target for Salesforce.com (NYSE:CRM) shares, reducing it to $350 from the previous $390, while maintaining a Neutral rating on the stock. According to InvestingPro data, this target aligns with current market sentiment, as the stock appears slightly undervalued based on their proprietary Fair Value model. The revision comes as Salesforce approaches its fourth fiscal quarter earnings report, set for February 26, with the company maintaining strong financial health metrics and an overall "GOOD" rating from InvestingPro’s comprehensive analysis.
In his analysis, Radke pointed to a variety of factors influencing the current outlook for Salesforce. He mentioned mixed demand trends, which include positive indicators such as higher growth targets for 2025, strong momentum in CPQ (Configure, Price, Quote), and active engagement with Agentforce. InvestingPro data shows impressive gross profit margins of 77% and revenue growth of 9.5% over the last twelve months, though these were tempered by significant discounts used to drive Agentforce adoption and continued scrutiny over budgets that could hinder growth.
The analyst anticipates that revenue and bookings growth for Salesforce will likely stay in the high single digits. Despite the lower price target, Radke believes that the consensus estimates for the fourth and first quarters are attainable. The cautious stance is partly due to uncertainties surrounding the commercial success of Agentforce, a tool designed to enhance sales agent productivity. Radke expressed the need for more substantial evidence of Agentforce’s impact in production environments to assess its potential to contribute to a reacceleration of growth for Salesforce.
The new price target of $350 is based on approximately 26 times the expected free cash flow for the calendar year 2025. This adjustment incorporates a degree of caution and a slight reduction in the fiscal year 2026 estimates. As Salesforce continues to navigate the balance between driving adoption and managing discount levels, investors and analysts alike will be watching closely for signs of sustainable growth.
In other recent news, Salesforce has expanded its strategic partnership with Google Cloud, aiming to enhance AI capabilities and infrastructure. This collaboration will see Salesforce’s applications, including Agentforce, Data Cloud, and Customer 360, hosted on Google Cloud, promising new regional access and simplified procurement through the Google Cloud Marketplace. Alphabet (NASDAQ:GOOGL) Inc.’s Google has secured a $2.5 billion cloud deal with Salesforce, which will involve Salesforce spending this amount over seven years on Google’s cloud-computing services. This agreement enables Salesforce customers to operate their software on Google Cloud, marking a significant step in competing with Microsoft (NASDAQ:MSFT)’s offerings.
Analyst firms have weighed in on Salesforce’s developments, with Citizens JMP maintaining a Market Outperform rating and a $450 price target, citing a significant $170 million contract with the Department of the Treasury as a positive factor. TD Cowen also maintained a Buy rating with a $400 target, highlighting Salesforce’s strong AI positioning and growth execution. The firm noted that Salesforce’s Agentforce and Data Cloud are significant growth drivers, with new product adoption trends showing promise. These recent developments underscore Salesforce’s strategic moves in AI and cloud services, as well as analyst confidence in its growth trajectory.
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