On Wednesday, JPMorgan updated its outlook on Salesforce.com (NYSE: NYSE:CRM), increasing the price target to $380 from the previous $340 while retaining an Overweight rating on the stock. With a current market capitalization of $316.85 billion and trading near its 52-week high of $348.86, Salesforce has demonstrated strong momentum.
According to InvestingPro analysis, the stock appears undervalued based on its Fair Value metrics, suggesting potential upside alignment with JPMorgan's new target. The firm's analyst highlighted the recent survey metrics from Salesforce's fiscal third quarter in October, which showed some improvement, although they did not indicate a significant change in the demand environment compared to earlier in the year.
The analyst noted that despite a slight miss in Q3 earnings per share due to investment losses, other financial metrics such as current remaining performance obligations (cRPO), margins, and cash flow had either met or exceeded expectations.
InvestingPro data reveals impressive fundamentals, including a perfect Piotroski Score of 9 and robust gross profit margins of 76.35%. The company maintains healthy revenue growth of 10.26% year-over-year, with 14 additional key insights available to Pro subscribers. Additionally, the Q4 cRPO guidance was considered a positive sign.
The report mentioned that Salesforce's core business appears to be stable, with no significant issues in demand or deal slippage during the challenging third quarter.
This stability is reflected in InvestingPro's comprehensive analysis, which shows strong financial health scores and indicates the company is well-positioned among the 1,400+ US equities covered in Pro Research Reports. This stability is expected to set the stage for a stronger fourth quarter. The company's focus on Agentforce, a product mentioned in the earnings call, was also highlighted as a positive factor, with Salesforce's discussion of the product exceeding expectations.
JPMorgan's bullish stance on Agentforce is maintained, despite acknowledging that the road to monetization may be long. The firm believes that Agentforce has the potential to reinvigorate the narrative for Salesforce and replenish the deal pipeline. The analyst's confidence is backed by extensive research and proprietary work on Agentforce, which includes 30 pages of analysis published in the previous week.
In other recent news, Salesforce has been the subject of various analyst upgrades and revisions following strong quarterly results. Mizuho (NYSE:MFG) Securities raised the price target for Salesforce to $425, maintaining an Outperform rating. This follows a 10% growth in customer relationship management product orders, surpassing the expected 8.5%. Oppenheimer raised Salesforce's target to $415, citing expectations of reaccelerated top-line revenue growth by the second quarter of FY26.
Needham also raised its price target for Salesforce to $375, maintaining a buy rating, following a 10% growth in current remaining performance obligations (cRPO). Canaccord Genuity raised its price target for Salesforce to $415, highlighting the company's impressive financial health and 76.35% gross profit margins.
In addition to financial performance, Salesforce's new product, Agentforce, has seen substantial upsell activities among existing Service Cloud customers, positioning it as a significant growth catalyst. The company also made slight upward revisions to its fiscal year 2025 estimates, increasing its revenue, operating margin, and free cash flow margin guidance.
On the contrary, 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. Despite this, analysts from Goldman Sachs, Evercore ISI, Raymond (NS:RYMD) James, and Citi 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.
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