Salesforce stock falls despite TD Cowen’s Buy rating and $335 target

Investing.com - Salesforce.com (NYSE:CRM), the $229 billion market cap software giant with impressive gross profit margins of 77%, saw its stock fall approximately 6% in after-hours trading despite TD Cowen reiterating its Buy rating and $335.00 price target on the company. According to InvestingPro analysis, the company’s stock is currently trading below its Fair Value.

The cloud-based software provider reported second-quarter revenue and current remaining performance obligation (cRPO) growth approximately 1% ahead of estimates, while maintaining its fiscal year 2026 constant currency subscription revenue growth guidance at around 9%. The company maintains a GREAT financial health score, supported by steady revenue growth of 7.97% over the last twelve months.

TD Cowen noted that Salesforce’s Data Cloud and AI annual recurring revenue (ARR) continues to demonstrate strong early adoption with 120% year-over-year growth, suggesting solid traction for the company’s artificial intelligence offerings.

The investment firm characterized the quarter as "fairly solid" relative to its mixed channel checks and prevailing negative investor sentiment, attributing the stock decline partly to Salesforce not raising its revenue and margin guidance despite beating expectations.

At a post-earnings valuation of approximately 15 times enterprise value to calendar year 2026 estimated free cash flow, TD Cowen considers Salesforce’s valuation "attractive" and maintains its $335 price target, which represents roughly 20 times enterprise value to calendar year 2026 estimated free cash flow. With a current P/E ratio of 36.77x, investors seeking deeper insights can access comprehensive valuation analysis and 8 additional key insights through InvestingPro’s detailed research reports.

In other recent news, Salesforce.com reported strong second-quarter results, exceeding expectations across key metrics. The company highlighted significant growth in its Data Cloud and AI offerings, achieving over $1.2 billion in annual recurring revenue with a 120% year-over-year increase. Despite these positive results, several financial firms have adjusted their price targets for Salesforce. RBC Capital lowered its target to $250, citing a mixed outlook, while Piper Sandler reduced its target to $315 due to foreign exchange concerns. Wells Fargo also adjusted its target to $265, pointing to slower-than-expected AI adoption. JPMorgan, however, noted the company’s revenue and performance obligations exceeded expectations, adjusting its target to $365 while maintaining an Overweight rating. Canaccord Genuity set its new target at $300, emphasizing Salesforce’s steady growth and improved operating margins. These developments reflect a range of perspectives from analysts on Salesforce’s future performance.

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