JPMorgan maintains Salesforce stock Overweight with $380 target

On Thursday, JPMorgan reiterated its Overweight rating on Salesforce.com shares (NYSE:CRM), maintaining a $380.00 price target. According to InvestingPro data, Salesforce, with its $264.8 billion market cap, currently trades at a P/E ratio of 42.7x, reflecting its position as a prominent player in the software industry. The company’s overall financial health score is rated as GOOD by InvestingPro analysts. The firm’s analyst provided an update following Salesforce’s first-quarter results, which included a steady current remaining performance obligation (cRPO) growth in constant currency (CC) and revenue and free cash flow (FCF) that exceeded Street expectations.

Salesforce reported a first-quarter cRPO of $29.6 billion, marking an 11% increase in CC, consistent with the previous quarter and slightly above guidance and consensus. Organic CC cRPO growth was calculated at approximately 10%. Total (EPA:TTEF) revenue for the quarter was $9.83 billion, a 7.6% year-over-year growth in USD and an 8% increase in CC, also surpassing consensus estimates. Subscription & Support revenue grew by 9% in CC, aligning with guidance.

The company’s Integration & Analytics segment saw an acceleration of growth, while the Platform & Other segment, which includes Data Cloud and Agentforce revenues, also experienced an uptick compared to the previous quarter. Salesforce’s larger acquired products, Tableau and MuleSoft, showed improved growth in the Integration & Analytics segment, and Slack’s growth, included in the Platform & Other segment, remained robust.

Despite a slight operating margin miss in Q1, Salesforce’s pro forma (PF) earnings per share (EPS) of $2.58 beat expectations by $0.03. The company’s FCF of $6.30 billion, representing a 64.1% margin, impressively exceeded consensus by $409 million. Salesforce highlighted strong growth in its small and medium-market businesses and reported broad-based new business growth across regions, with particularly healthy performance in the Communications & Media and Health & Life Sciences verticals.

Salesforce disclosed that its Data Cloud and AI annual recurring revenue (ARR) surpassed $1 billion in Q1, with Agentforce ARR contributing approximately $100 million. The company has closed over 8,000 deals since launching Agentforce, with more than 4,000 being paid customers.

For the second quarter, cRPO growth guidance was slightly above the Street in dollar terms but modestly below consensus in CC. The company raised its full-year 2025 revenue outlook to $41.15 billion at the midpoint, reflecting a mix of favorable foreign exchange movements and a partial pass-through of the Q1 revenue beat. Analysts maintain a bullish stance on Salesforce, with price targets ranging from $200 to $442, suggesting significant potential upside. A comprehensive analysis of Salesforce’s valuation and growth prospects is available in the exclusive Pro Research Report on InvestingPro.

The article discussed Salesforce’s strategic acquisition of Informatica and its focus on unifying applications, data, and agents to enhance its Agentic vision. Salesforce emphasized the importance of Informatica’s AI-powered master data management (MDM) and extract, transform, load (ETL) platform in achieving differentiated Agentic workflows. The acquisition is expected to close in early fiscal 2027, subject to regulatory approval, and is anticipated to be accretive to Salesforce’s operating margin, EPS, and FCF by the second year post-close.

JPMorgan concluded by reaffirming its positive outlook on Salesforce, highlighting the company’s transformation into a profitable and cash-generative business. This transformation is evident in the company’s robust financials, with a return on equity of 10% and an impressive cash return on invested capital of 17%. Discover more valuable insights about Salesforce and 1,400+ other stocks through detailed Pro Research Reports, available exclusively on InvestingPro. The firm believes that Salesforce’s balance of growth with profitability and FCF generation, along with the integration of Generative AI capabilities, will support an eventual upside from current levels. The Overweight rating and December 2025 price target of $380 remain unchanged.

In other recent news, Salesforce has reported impressive financial results for the first quarter of fiscal year 2026, with earnings per share (EPS) of $2.58, surpassing the consensus estimate of $2.52. The company’s revenue reached $9.83 billion, exceeding the $9.75 billion forecasted by analysts, reflecting an 8% year-over-year growth. Salesforce also announced an $8 billion acquisition of Informatica, aiming to bolster its data capabilities. The company raised its fiscal year 2026 revenue guidance to $41.3 billion, signaling confidence in its strategic initiatives. Analysts at Goldman Sachs and JMP Securities have expressed optimism, with Goldman Sachs raising its price target to $385 and maintaining a "Buy" rating, while JMP Securities reaffirmed a Market Outperform rating with a $430 price target. Salesforce’s subscription revenue showed strong performance, reaching $9.30 billion, and its remaining performance obligations totaled $60.9 billion, marking a 13% year-over-year growth. The company’s strategic expansion in the Data Cloud and AI segments has also been highlighted, with these areas experiencing significant growth.

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