DoD tests AI models that make it easy to switch from vendors like Palantir
On Thursday, Piper Sandler adjusted its price target for Salesforce.com (NYSE:CRM) stock, reducing it slightly from $405.00 to $400.00, while maintaining an Overweight rating on the shares. The prominent software industry player, currently valued at $294 billion, has achieved a perfect Piotroski Score of 9 according to InvestingPro data, indicating strong financial health. The move comes as Salesforce faces a growth reset to 7.4% for the year, compared to a consensus of 9.1%, and a 6.6% top-line outlook for the first quarter.
Analysts at Piper Sandler see this revised growth forecast as a "clearing event" that could benefit the new COO/CFO by setting a more achievable performance baseline. With impressive gross profit margins of 77% and strong financial metrics, InvestingPro analysis reveals 12 additional key factors that could impact Salesforce’s performance. They believe there are multiple factors that could provide upside to this cautious scenario. These include direct AI monetization opportunities through Salesforce’s Data Cloud and Agentforce, as well as indirect benefits from increasing multi-cloud attach-rates.
Moreover, the potential for continued stabilization within the create/close process and the easing of foreign exchange headwinds are also viewed as positive factors. Despite the lowered revenue estimates for the fiscal year 2026, Piper Sandler has chosen to maintain its fiscal year 2027 forecasts, citing the potential for AI monetization.
The firm’s analysts underscore that even with a growth reset, Salesforce is positioned to sustain double-digit free cash flow (FCF) growth, driven by improving margins. With a current free cash flow yield of 4% and robust cash flows sufficient to cover interest payments, they recommend buying the stock on the pullback. According to InvestingPro’s Fair Value analysis, the stock appears to be trading near its fair value, with comprehensive valuation insights available in the Pro Research Report.
In other recent news, Salesforce has been the focus of several analyst evaluations following its recent earnings report. The company reported fourth-quarter results with revenue performance aligning with expectations and profit estimates exceeding forecasts due to increased operational efficiency. Salesforce’s Data Cloud and Artificial Intelligence Annual Recurring Revenue (ARR) saw a significant year-over-year increase of 120%, reaching $900 million. However, the fiscal year 2026 revenue growth forecast of 7%-8% fell short of some analysts’ expectations, prompting DA Davidson to lower its price target from $300 to $275, maintaining a Neutral rating.
Scotiabank (TSX:BNS) also adjusted its price target for Salesforce from $440 to $400, citing robust year-end performance but noting the fiscal year 2026 guidance was slightly below consensus estimates. Meanwhile, Raymond (NSE:RYMD) James reduced its price target to $375 but retained a Strong Buy rating, emphasizing Salesforce’s market leadership and potential for continued growth. KeyBanc maintained an Overweight rating with a $440 target, focusing on the traction of Salesforce’s Agentforce platform, despite concerns about extended sales cycles for core cloud services.
Needham held its Buy rating and $400 price target, noting the company’s strategic focus on operational efficiencies and the potential upside from Agentforce’s momentum. These developments highlight a mixed but generally optimistic outlook from analysts, with varying expectations for Salesforce’s future performance and growth trajectory.
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