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On Tuesday, Goldman Sachs reiterated its Buy rating on salesforce.com (NYSE:CRM) shares, maintaining a price target of $340. Currently trading at $273.13, InvestingPro analysis suggests the stock is currently undervalued. The firm’s analysts highlighted their positive outlook ahead of the company’s first-quarter fiscal year 2026 earnings report, set for May 28, 2025. With a market capitalization of $262 billion and analyst targets ranging from $243 to $442, Salesforce maintains its position as a prominent player in the software industry. They anticipate that while artificial intelligence (AI) will continue to be a key topic, significant updates on Agentforce’s revenue contribution are not expected until the Dreamforce event on October 14, 2025.
Salesforce is projected to report a 7% increase in revenue and a 10% rise in current remaining performance obligations (cRPO), with a non-GAAP operating margin (OpM) of 33% and non-GAAP earnings per share (EPS) of $2.56. The company has demonstrated strong financial performance with impressive gross profit margins of 77.19% and revenue growth of 8.72% over the last twelve months. InvestingPro subscribers can access 8 additional key insights about Salesforce’s financial health and growth prospects through exclusive ProTips. Goldman Sachs expresses confidence in these figures and believes that Salesforce will maintain net new revenue levels comparable to fiscal year 2024.
The analysis also takes into account several factors that have been priced into the stock’s year-to-date performance, which has seen a decline of 17% compared to the Nasdaq’s relatively stable performance. These factors include potential pressures related to the Department of Justice’s oversight, small and medium-sized business execution, and transitions in the CFO/COO roles.
Despite these challenges, Goldman Sachs views Salesforce as well-positioned to increase its market share due to stable software spending trends and the company’s strategic long-term investments. The analysts note that Salesforce’s emerging product momentum could support revenue re-acceleration. They also mention that first-quarter cRPO growth is not seen as a significant forward indicator, while guidance for second-quarter cRPO will be more closely watched.
The firm does not foresee an upward revision to Salesforce’s fiscal year 2026 revenue forecast despite a modest incremental foreign exchange tailwind. Looking ahead, Goldman Sachs remains optimistic about Salesforce’s ability to achieve sustainable growth, an operating margin above 35%, and free cash flow per share of $17-18 in fiscal year 2027. The current valuation presents a compelling risk/reward profile at 17 times enterprise value to calendar year 2026 free cash flow, compared to peers’ average of approximately 28 times. InvestingPro data shows the company maintains a strong financial health score of 2.95 (GOOD), with a PEG ratio of 0.82, indicating attractive valuation relative to growth. For detailed valuation metrics and comprehensive analysis, investors can access the exclusive Pro Research Report, available for Salesforce and 1,400+ other top US stocks.
In other recent news, Salesforce has introduced a new flexible pricing model for its Agentforce platform, aimed at enhancing AI adoption across various business sectors. This includes the ’Flex (NASDAQ:FLEX) Credits’ system, allowing companies to purchase credits for specific actions, and the ’Flex Agreement,’ which provides flexibility in managing investments between user licenses and digital labor. Additionally, Salesforce has partnered with the U.S. General Services Administration to offer significant discounts on Slack for federal agencies, with reductions lasting until November 2025. In terms of analyst ratings, Stifel and TD Cowen have maintained their Buy ratings with a price target of $375, while JMP Securities reiterated a Market Outperform rating with a $430 price target. These firms express confidence in Salesforce’s strategic direction, especially in areas like Data and AI. Salesforce’s ongoing Agentforce World Tour and recent product updates are part of its strategy to strengthen its market position, particularly in regulated industries. The company’s efforts to address customer concerns through pricing updates and tailored solutions are seen as positive steps towards increased service adoption.
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