Salesforce stock price target lowered to $300 by Canaccord on steady growth

Investing.com - Canaccord Genuity lowered its price target on salesforce.com (NYSE:CRM) to $300 from $350 while maintaining a Buy rating following the company’s second-quarter results. The stock, currently trading at $256.45, remains within analysts’ broader target range of $225-$440, according to InvestingPro data, which indicates the company appears slightly undervalued based on its proprietary Fair Value calculations.

The cloud software giant, now commanding a market capitalization of $245.17 billion, reported 9% revenue growth in constant currency and 10% current remaining performance obligation (cRPO) growth in the quarter. Salesforce achieved non-GAAP operating margins of 34.3%, representing approximately 60 basis points of operating leverage, while maintaining impressive gross profit margins of 77.34%. InvestingPro analysis reveals 8 more key financial metrics and insights available to subscribers.

Canaccord noted that management attributed much of the quarter’s revenue upside to timing-driven factors, including upfront revenue recognition on licensed products like MuleSoft and Tableau, as well as professional services.

The company’s Data Cloud and Agentic AI initiatives reached $1.2 billion in annual recurring revenue (ARR), growing 120% year-over-year and approximately 20% sequentially. Despite this growth, these initiatives remain relatively small compared to Salesforce’s overall business, which exceeds $40 billion in revenue.

Salesforce slightly raised both its full-year revenue and operating margin targets, but guided third-quarter results below expectations. The company projects high-single-digit revenue growth for the remainder of the year, consistent with recent trends.

In other recent news, Salesforce reported its second-quarter earnings, showing a 9% increase in total revenue and a 10% rise in current remaining performance obligations, aligning with UBS estimates. The company maintained its fiscal year 2026 outlook of 8% growth and 34% margins. Despite these results, Bernstein lowered its price target for Salesforce to $221, citing soft guidance that disappointed investors, as the company’s third-quarter outlook only met the top end of consensus estimates. On the other hand, Barclays reiterated an Overweight rating with a $316 price target, mentioning a disconnect in Salesforce’s current investment case due to increased sales capacity without corresponding growth acceleration.

Goldman Sachs reaffirmed its Buy rating and $385 price target, expressing optimism around Salesforce’s AI initiatives, despite a 5% drop in after-hours trading following the earnings report. The company modestly outperformed with revenue and cRPO exceeding expectations by 1%, though its free cash flow margin fell short by 180 basis points. KeyBanc also adjusted its price target to $400 from $440, maintaining an Overweight rating and attributing the change to negative sentiment in the application software sector. These developments reflect a mix of cautious optimism and concern among analysts regarding Salesforce’s future growth trajectory.

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