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On Thursday, Morgan Stanley (NYSE:MS) adjusted its outlook on Salesforce.com (NYSE:CRM) shares, raising the price target to $404 from the previous $393, while reiterating an Overweight rating on the stock. Currently trading at $276.03, Salesforce maintains a strong "Buy" consensus among analysts, with targets ranging from $200 to $442. According to InvestingPro analysis, the stock appears undervalued based on its Fair Value calculation. The firm’s analysts highlighted the company’s first-quarter performance and its confirmation of fiscal year 2026 targets as key factors underpinning this decision, particularly in the face of broader market volatility and heightened concerns following recent mergers and acquisitions.
The analysts noted that Salesforce’s Cloud Revenue Performance Obligation (cRPO) growth of 11% in constant currency during the first quarter was a positive sign, especially against the backdrop of an uncertain spending environment. This growth, along with the reiteration of the FY26 targets, was seen as indicative of the company’s resilience and potential for continued success. InvestingPro data reveals impressive financial health metrics, with a robust gross profit margin of 77.19% and strong revenue growth of 8.72% over the last twelve months.
Morgan Stanley’s analysis pointed to the growing momentum behind Salesforce’s Data Cloud and Agentforce as further evidence of the company’s strong positioning in the market, especially in the area of artificial intelligence (AI). The analysts believe that the potential for AI within Salesforce is not fully reflected in the current share price, which trades at 17 times the estimated value to calendar year 2026 free cash flow (EV/CY26 FCF).
The report concluded with a positive outlook for Salesforce’s stock, suggesting that the current share price presents a favorable risk/reward scenario for investors. The analysts emphasized their Overweight rating, indicating confidence in the company’s future performance and stock value. With an EPS forecast of $11.41 for FY2026 and a PEG ratio of 0.83, the stock shows promising growth potential. Discover more valuable insights and 8 additional ProTips for Salesforce in the comprehensive InvestingPro Research Report, part of the platform’s coverage of 1,400+ top US stocks.
In other recent news, Salesforce has reported strong financial results for the first quarter of fiscal year 2026, with revenue reaching $9.83 billion, surpassing analysts’ expectations of $9.75 billion. This marks an 8% year-over-year increase, driven by robust subscription and support sales. The company’s non-GAAP earnings per share stood at $2.58, exceeding the forecasted $2.52. Salesforce’s remaining performance obligations (RPO) totaled $60.9 billion, showing a 13% year-over-year growth. The company also announced an $8 billion acquisition of Informatica, aiming to enhance its data capabilities, with the deal expected to close in early fiscal 2027.
Analysts have responded positively to Salesforce’s performance. JPMorgan maintained an Overweight rating with a $380 price target, citing the company’s transformation into a profitable and cash-generative business. Meanwhile, Goldman Sachs raised its price target to $385, highlighting Salesforce’s strategic expansion in the Data and AI market. JMP Securities also reaffirmed its Market Outperform rating with a $430 target, reflecting confidence in Salesforce’s growth potential despite broader market volatility. These developments underscore Salesforce’s strong market position and growth trajectory, as emphasized by its recent financial results and strategic initiatives.
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