Piper Sandler lowers Salesforce stock price target to $315 on FX concerns

Investing.com - Piper Sandler has lowered its price target on Salesforce (NYSE:CRM) to $315 from $335 while maintaining an Overweight rating on the stock. With a current market capitalization of $225.7 billion and impressive gross profit margins of 77.3%, InvestingPro analysis suggests the stock may be undervalued at its current price of $236.54.

The research firm attributed Salesforce’s second-quarter upside to foreign exchange and licensing tailwinds, which it characterized as non-recurring factors. Despite strong quarterly results and better-than-feared constant currency current remaining performance obligation (cRPO) guidance of 9%, Salesforce shares declined approximately 5% after market close. The company maintains a GREAT financial health score according to InvestingPro, which offers 8 additional key insights about Salesforce’s financial position.

Piper Sandler noted that Salesforce’s Data and AI momentum remained strong with 120% year-over-year growth, but emphasized that these offerings still represent only about 3% of annual recurring revenue (ARR) and 10% of net new ARR for the quarter.

The firm specifically mentioned that Agentforce, while showing promising potential, remains too small to drive broader reacceleration in top-line growth for the company. Piper Sandler’s price target reduction reflects a lower target EV/FCF multiple of 19x versus the previous 20x.

Salesforce stock has underperformed the broader market significantly year-to-date, declining 23% compared to the S&P 500’s 10% gain, reflecting bearish investor sentiment on both the company and the broader application software category.

In other recent news, Salesforce reported its second-quarter earnings, showing a 9% increase in revenue and a 10% growth in current remaining performance obligation (cRPO). The company achieved non-GAAP operating margins of 34.3%, which aligns with UBS estimates and represents about 60 basis points of operating leverage. Despite these figures, Wells Fargo lowered its price target for Salesforce to $265, citing slower-than-expected adoption of its AI offerings. JPMorgan also adjusted its price target to $365, noting that while revenue and cRPO metrics exceeded expectations, the fiscal year 2026 revenue outlook remained unchanged. Canaccord Genuity revised its price target to $300, maintaining a Buy rating, and Barclays reiterated its Overweight rating with a price target of $316. UBS maintained its Neutral rating and $260 price target, as Salesforce’s results met expectations without exceeding them. The company reaffirmed its fiscal year 2026 outlook, projecting 8% growth and 34% margins.

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