Fed’s Powell opens door to potential rate cuts at Jackson Hole
On Wednesday, Evercore ISI analyst Kirk Materne reiterated an Outperform rating with a $350.00 price target on Salesforce.com (NYSE:CRM), a target aligned with InvestingPro’s analysis showing the stock is currently undervalued. With a market capitalization of $263.18 billion, Salesforce’s solid start to the year included quarterly results that surpassed expectations slightly. Despite the constant currency guidance remaining largely unchanged, Materne suggested that this early in the fiscal year, the stability should provide investors with a sense of security that the risks are well accounted for.
The analyst emphasized the importance of Salesforce demonstrating accelerating growth throughout the year, increased adoption of its Agentforce product, and potential further improvements to its operating margin guidance. The company’s impressive gross profit margin of 77.19% and revenue of $37.9 billion demonstrate its market strength. Materne highlighted that the combined Annual Recurring Revenue (ARR) for Data Cloud and Agentforce has surpassed $1 billion, with a year-over-year growth exceeding 120%. Since October, Salesforce has closed approximately 8,000 Agentforce deals, nearly half of which are paid contracts. Furthermore, nearly 60% of the top 100 deals in the quarter included both Data Cloud and AI, indicating strong product synergy. (InvestingPro subscribers can access 8 more key insights about Salesforce’s financial health and growth potential.)
In addition to the performance metrics, Salesforce’s Chief Financial Officer, Robin Washington, and some product leaders are scheduled to host a Product and Innovation webinar at 1 pm Eastern Time tomorrow. Materne noted that Evercore ISI will provide more details following the webinar, which will conclude with a call at 5 pm Eastern Time.
The reaffirmation of the Outperform rating and the $350.00 price target by Evercore ISI reflects confidence in Salesforce’s strategy and market position. With the company’s focus on growth and product integration, investors will be watching closely for further developments and the potential impact on Salesforce’s financial performance in the coming year.
In other recent news, Salesforce announced its intention to acquire Informatica for approximately $8 billion in equity value. The acquisition is expected to be accretive to Salesforce’s operating margins, earnings per share, and free cash flow in the fiscal year 2028, according to Morgan Stanley (NYSE:MS). Loop Capital maintains a Hold rating on Salesforce, with a $300 target, highlighting that the acquisition will not negatively impact Salesforce’s revenue growth rate. Canaccord Genuity adjusted its price target for Salesforce to $350, down from $400, while maintaining a Buy rating on the stock.
Truist Securities downgraded Informatica from Buy to Hold, citing the acquisition’s benefits for Informatica’s shareholders as it transitions its business model. DA Davidson reiterated a Neutral rating on Informatica, noting the acquisition’s potential but expressing caution about fully endorsing the deal. The acquisition is anticipated to enhance Salesforce’s Data Cloud platform and attract Informatica’s established customer base. Analysts from Loop Capital and Truist Securities expect the acquisition to contribute positively to Salesforce’s margins and cash flow, with Loop Capital speculating on Salesforce’s potential interest in the larger cloud data warehousing market.
Salesforce plans to finance the acquisition through a combination of available cash and new debt, with a post-transaction net cash position estimated at around $9 billion. The transaction is expected to close early in Salesforce’s fiscal year 2027, subject to regulatory approvals and customary closing conditions.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.