Index falls as earnings results weigh; pound above $1.33, Bodycote soars
On Thursday, shares of Salesforce.com (NYSE:CRM) witnessed a decline of 5% in after-hours trading, with the stock currently trading at $307.33. This drop came despite RBC Capital maintaining an Outperform rating and a $420.00 price target on the stock. According to InvestingPro analysis, Salesforce appears undervalued, with the stock showing a perfect Piotroski Score of 9, indicating strong financial health. The dip was attributed to foreign exchange (FX) related "noise" in the company’s recently reported quarterly results and future guidance.
In the latest earnings report, Salesforce.com’s revenue would have surpassed consensus estimates on a constant currency (cc) basis. With impressive gross profit margins of 76.94% and trailing twelve-month revenue of $37.19 billion, the company’s subscription revenue growth remained consistent, and the committed remaining performance obligation (cRPO) saw a 1-point acceleration. The firm took note of the positive impact of early renewals on bookings and highlighted the significant growth of Salesforce’s Data Cloud and artificial intelligence (AI) annual recurring revenue (ARR), which soared to $900 million, marking a 120% increase. This is a substantial rise from the previous fiscal year’s $400 million, which at that time represented a 90% growth from Data Cloud alone. InvestingPro subscribers can access detailed analysis of Salesforce’s AI initiatives and 12 additional exclusive ProTips.
Looking forward to fiscal year 2026, Salesforce’s subscription growth and operating margin guidance met analyst expectations, with analysts forecasting EPS of $10.21 for FY2025. Additionally, RBC Capital noted that demand trends within the United States have shown signs of stabilization. With the current valuation seen as favorable, RBC Capital suggests there could be potential for margin improvement going forward. Despite the after-hours slip, the outlook for Salesforce’s financial performance appears to remain positive according to RBC Capital’s analysis. Get comprehensive insights into Salesforce’s valuation and growth prospects through the detailed Pro Research Report, available exclusively on InvestingPro.
In other recent news, Salesforce reported its fourth-quarter earnings for 2025, surpassing analysts’ expectations with an earnings per share (EPS) of $2.78, compared to the forecast of $2.61. However, the company’s revenue of $10 billion fell short of the anticipated $10.4 billion. For the full year, Salesforce’s revenue grew by 9% year-over-year, reaching $37.9 billion. The company projects revenue growth of 7-8% for fiscal year 2026. Meanwhile, Loop Capital Markets adjusted its price target for Salesforce shares from $330 to $300, maintaining a Hold rating, while Canaccord Genuity reduced its target from $415 to $400 but kept a Buy rating. Raymond (NSE:RYMD) James also lowered its price target from $425 to $375, maintaining a Strong Buy rating. Analysts from these firms highlighted Salesforce’s growth in its Data Cloud & AI offerings and its new AI-powered platform, Agentforce, which is expected to contribute significantly to future growth. Despite the mixed signals from recent financial updates, analysts remain optimistic about Salesforce’s long-term potential, particularly in AI integration and cash flow generation.
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