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On Thursday, Evercore ISI reiterated its Outperform rating on Salesforce.com (NYSE:CRM) shares, maintaining a $420.00 price target for the $294 billion software giant. Salesforce.com reported fourth-quarter results that aligned with revenue expectations and exceeded earnings per share (EPS) estimates. According to InvestingPro, the company maintains impressive gross profit margins of 77% and has achieved a perfect Piotroski Score of 9, indicating strong financial health. Subscribers can access 10+ additional exclusive ProTips about CRM’s financial position. The company’s EPS of $2.78 surpassed both the analyst’s and the Street’s projection of $2.61. Calculated Remaining Performance Obligation (CRPO) growth also outperformed expectations, considering an approximate $200 million foreign exchange headwind.
Salesforce’s early renewals contributed to the CRPO’s outperformance on a constant currency basis. The company expressed satisfaction with business activity levels, particularly noting signs of stabilization in the U.S. market. Although the first-quarter guidance suggested a year-over-year growth of approximately 6-7% (or ~7% in constant currency), which was slightly below expectations, the full-year subscription revenue outlook was set at 9% in constant currency. This indicates a more stable demand forecast and potential for revenue acceleration in the second quarter and second half of the fiscal year, with a 10% exit rate still achievable.
The company anticipates operating margins to improve throughout the year, bolstered by efficiencies from the implementation of Agentforce. Salesforce has closed 5,000 Agentforce deals, including 3,000 paid contracts, which could have a positive ’halo effect’ on the rest of the platform and support subscription revenue growth. With revenue growing at 9.5% over the last twelve months and analysts forecasting continued growth, InvestingPro’s comprehensive Research Report offers detailed insights into the company’s growth trajectory and financial health metrics.
Despite the conservative guidance for the first quarter, Evercore ISI views the valuation as attractive, especially as revenue is expected to pick up after the first quarter. The firm suggests that the stock’s current valuation, at approximately 18.5 times enterprise value to CY26 free cash flow, presents a buying opportunity in light of anticipated revenue growth, margin expansion, and increasing momentum for Agentforce throughout the fiscal year. This view aligns with InvestingPro’s Fair Value analysis, which suggests CRM is currently undervalued. With analyst targets ranging from $247 to $450 and a strong consensus recommendation of 1.77 (where 1 is Strong Buy), Evercore ISI reasserts its Outperform rating and $420 price target for Salesforce.com stock.
In other recent news, Salesforce.com reported its third-quarter fiscal year 2025 earnings with a non-GAAP earnings per share of $2.78, surpassing the consensus estimate of $2.61. However, the company’s revenue of $9.99 billion fell short of the expected $10.04 billion. Despite these mixed results, Salesforce’s remaining performance obligations totaled $63.4 billion, exceeding the consensus of $62.0 billion and showing an 11% year-over-year increase. Analysts from Goldman Sachs maintain a Buy rating with a $400 target, expressing confidence in Salesforce’s growth trajectory and potential in the AI sector.
JMP Securities adjusted its price target for Salesforce to $430 from $450 while retaining a Market Outperform rating, following the earnings release. Stifel also revised its target to $375 from $425, citing Salesforce’s strong position in Agentic AI and its potential to sustain growth. RBC Capital maintained a $420 price target, noting positive demand trends and potential for margin improvement. Meanwhile, Loop Capital lowered its target to $300, focusing on Salesforce’s future potential with the Agentforce platform, though noting that substantial contributions to earnings are expected in fiscal year 2027. These developments highlight Salesforce’s ongoing strategic focus on AI and cloud solutions as key drivers for future growth.
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