On Wednesday, Canaccord Genuity maintained a Buy rating on Salesforce.com (NYSE:CRM) and increased its price target to $415 from $315.
The firm underlined Salesforce's performance, noting that the company's shares have outpaced the broader software index, registering a 30% rise since Dreamforce compared to the software index's 21% increase.
"We continue to think CRM is one of the more interesting relative value plays on AI in software, and as such, our BUY rating is unchanged," analysts at Canaccord said.
They highlighted Salesforce's valuation, which now stands at 23 times enterprise value to free cash flow (EV/FCF) based on calendar year 2025 estimates. Despite this valuation not being as low as before, the firm still sees it as offering compelling value.
The analyst believes Salesforce is in a strong position in the early stages of Agentic AI.
In the firm's analysis, three key points were reiterated. First, Salesforce's significant presence within large customers, particularly within its core Sales and Service Cloud, provides a foundation for sustained high-single digit growth.
Secondly, the potential for a modest reacceleration in growth over the next few years is anticipated, driven by price increases and the early phase of an AI consumption cycle.
Lastly, the firm foresees a path to over 40% operating margins for Salesforce in the long term, supported by a focus on efficient growth and capital return. This, in turn, is expected to drive high-teens growth in free cash flow per share, further propelling the stock upward.
In other recent news, Salesforce has been the subject of numerous analyst reviews following robust third-quarter fiscal year 2025 results. The company reported an 8% revenue growth in the third quarter, with total revenue reaching $36.47 billion. Despite this, the company's earnings per share (EPS) fell short of expectations, and the fourth-quarter forecast was below analyst predictions.
Analyst firms such as Goldman Sachs, Evercore ISI, Raymond (NS:RYMD) James, Citi, and JMP Securities have all raised their price targets for the company, citing strong earnings, revenue growth, and promising developments in products such as Agentforce and Data Cloud. However, Guggenheim maintained a neutral rating on Salesforce, expressing skepticism about the company's growth being primarily driven by early renewals rather than strong new bookings.
Evercore ISI, Goldman Sachs, and Raymond James have expressed confidence in Salesforce's potential to achieve significant free cash flow per share in the coming years, supported by sustained top-line growth. Citi recognized Salesforce's solid market position and the positive industry trends that support the company's growth and financial objectives.
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