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Investing.com - Goldman Sachs has reiterated its Buy rating and $385.00 price target on Salesforce.com (NYSE:CRM) despite the stock falling 5% in after-hours trading following its latest quarterly results. According to InvestingPro data, analysts’ targets range from $225 to $440, with the stock currently trading near $256. InvestingPro analysis suggests the stock is currently undervalued.
The company reported modest outperformance with revenue and current remaining performance obligation (cRPO) exceeding expectations by 1%, while operating margin beat consensus by 50 basis points. Free cash flow margin, however, came in 180 basis points below consensus estimates. With impressive gross profit margins of 77.34% and annual revenue of $38.59 billion, Salesforce maintains its position as a prominent player in the software industry.
Goldman Sachs noted several positive indicators, including a modest growth reacceleration in core Sales and Service Clouds to 8% year-over-year, up from 7% in the previous quarter, partially driven by seat growth that counters concerns about AI-induced job compression. InvestingPro analysis reveals the company maintains a strong financial health score of "GREAT," with 8 additional ProTips available to subscribers.
The firm highlighted that Salesforce’s Data Cloud and AI annual recurring revenue reached $1.2 billion, growing 120% year-over-year, while the company secured 6,000 paid Agentforce deals with 40% of new bookings coming from existing customer expansions.
Goldman Sachs expressed confidence that AI will become a "multi-year tailwind" rather than a disruption to Salesforce’s SaaS business, projecting the company could potentially scale to 35-40% operating margin over the next several years while maintaining approximately 10% subscription revenue growth.
In other recent news, Salesforce Inc. reported its Q2 2025 earnings, exceeding Wall Street expectations. The company achieved an earnings per share (EPS) of $2.91, surpassing the forecasted $2.78. Revenue for the quarter reached $10.25 billion, slightly above the anticipated $10.14 billion. This performance reflects positively on Salesforce’s financial health and operational efficiency. Following the earnings announcement, the stock saw a positive reaction from investors. Analysts have noted this as a strong quarter for Salesforce, with the company continuing to demonstrate robust growth. The earnings results highlight Salesforce’s ability to deliver value to its shareholders amidst a competitive market landscape. These developments are crucial for investors monitoring Salesforce’s trajectory in the tech industry.
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