FBN Securities retains salesforce.com Outperform rating, $360 target

Published 29/05/2025, 15:26
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On Thursday, FBN Securities maintained its positive stance on salesforce.com (NYSE:CRM) shares, reiterating an Outperform rating with a price target of $360. According to InvestingPro data, Salesforce maintains impressive gross profit margins of 77.2% and currently trades at a relatively low P/E ratio compared to its near-term earnings growth. The company’s market capitalization stands at $246.4 billion, making it a prominent player in the software industry. The firm’s analysts highlighted the company’s strong performance in the first fiscal quarter, noting an 8% year-over-year revenue increase, which surpassed consensus estimates by 1%. The current remaining performance obligation (cRPO) also showed a robust 12% growth year-over-year, exceeding consensus by 1.9%. Additionally, billings saw an 11% increase from the previous year, outperforming consensus by 2.5%.

Salesforce’s non-GAAP (NG) earnings per share (EPS) for the quarter were $2.58, slightly above the consensus by $0.03. Looking ahead, the company provided guidance for the second fiscal quarter revenue and NG EPS that are above market expectations. The expected cRPO growth for the second quarter is around 10% year-over-year as reported, aligning closely with the consensus estimate of $29.16 billion.

Despite these solid results, salesforce.com’s stock may face some pressure due to the company’s plan to increase its account executive workforce by 19%-22% by the end of the year, an acceleration from the current 14% year-over-year growth. This expansion could limit the upside potential for NG operating margin. Nevertheless, salesforce.com has maintained its target for a 34% non-GAAP operating margin by fiscal year 2026, which represents a 1 percentage point increase, albeit at a slower pace compared to the previous fiscal year.

The company also anticipates a 10%-11% year-over-year growth in cash flow from operations for fiscal year 2026. FBN Securities estimates that the free cash flow (FCF) margin will reach 33.5%, improving by 0.7 percentage points year-over-year. InvestingPro analysis shows the company’s strong financial health with a robust Altman Z-Score of 5.67 and a Piotroski Score of 8, indicating solid financial stability. Want deeper insights? InvestingPro offers comprehensive research reports with detailed analysis of Salesforce and 1,400+ other top stocks. The analysts expect salesforce.com to achieve an attractive Rule of 42 metric this year, which evaluates a company’s combined growth rate and profit margin.

FBN Securities expressed particular admiration for salesforce.com’s Platform/Other Cloud and Integration and Analytics Cloud segments. The Platform Cloud revenue grew by 14% year-over-year, exceeding expectations and marking an increase from the fourth fiscal quarter. This growth contributes to Salesforce’s impressive 5-year revenue CAGR of 17%. InvestingPro reveals that analysts maintain a strong buy consensus with a target suggesting significant upside potential. Discover 8 more exclusive ProTips and detailed valuation metrics with an InvestingPro subscription. The Integration and Analytics Cloud also performed well, with revenue growth of 10% year-over-year, surpassing estimates thanks to Tableau’s 12% year-over-year growth at constant currency. The report also noted the success of Agentforce, with over 4,000 paid customers and an annual recurring revenue exceeding $100 million.

In other recent news, Salesforce.com Inc. has been the focus of several analyst updates following its latest financial results and strategic moves. The company’s earnings showcased a strong performance, with its constant currency calculated remaining performance obligation (CRPO) growth surpassing expectations, driven by robust renewal activity and free cash flow generation. This has led to a reaffirmation of the Outperform rating from BMO Capital Markets with a $350 price target. Meanwhile, Northland analysts also maintained an Outperform rating but lowered their price target to $396, expressing minor concerns about Salesforce’s acquisition of Informatica.

Piper Sandler has shown confidence in Salesforce’s strategic direction, raising its price target to $335 and retaining an Overweight rating, citing the company’s growth in the Data Cloud sector and a conservative approach to acquisitions. Bernstein SocGen Group, however, raised its price target to $255 but maintained an Underperform rating, noting challenges in Salesforce’s maturing markets and competition in its AI initiatives. Oppenheimer also adjusted its price target to $370 from $380 while keeping an Outperform rating, pointing to Salesforce’s strong first-quarter results and cautious CRPO growth guidance for the second quarter.

These developments reflect a mixed but generally positive sentiment among analysts, with several emphasizing the strategic potential of Salesforce’s recent acquisitions and product innovations. The company’s ability to exceed growth expectations in a challenging economic environment has been highlighted as a testament to its resilience. Despite some concerns, the overall analyst outlook remains optimistic about Salesforce’s future prospects.

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