Index falls as earnings results weigh; pound above $1.33, Bodycote soars
On Thursday, JMP Securities analyst Patrick Walravens adjusted the price target for Salesforce.com (NYSE:CRM) shares to $430 from the previous $450 while retaining a Market Outperform rating. The revision followed Salesforce’s third-quarter fiscal year 2025 earnings release, which presented a combination of better-than-expected and missed figures. According to InvestingPro data, Salesforce maintains a perfect Piotroski Score of 9, indicating strong financial health and operational efficiency.
Salesforce reported non-GAAP earnings per share (EPS) of $2.78, surpassing the consensus estimate of $2.61, and a non-GAAP operating margin of 33.1%, slightly above the expected 32.8%. The company maintains impressive gross profit margins of 76.94%, as reported by InvestingPro. However, the company’s revenue of $9.99 billion fell short of the consensus projection of $10.04 billion. This marks the second revenue miss for Salesforce in the last nineteen years, with the previous one occurring just two quarters earlier.
Year-over-year, the company’s revenue grew by 8%, which was consistent with the growth rate in the previous quarter. Subscription revenue amounted to $9.45 billion, which was below the consensus of $9.51 billion and showed a slowdown from a 9% growth rate last quarter to 8% this quarter. On a positive note, Salesforce’s remaining performance obligations (RPO) totaled $63.4 billion, exceeding the consensus of $62.0 billion and showing an 11% year-over-year increase, which is an improvement from the 10% growth observed in the previous quarter.
In response to these mixed results, Salesforce stock declined by 5% in aftermarket trading. The stock’s performance has also lagged behind broader market indices, with an 8% drop year to date compared to a 1% increase for both the S&P 500 and the Russell 3000.
In other recent news, Salesforce.com reported its fourth fiscal quarter earnings, highlighting a 120% year-over-year increase in its Data Cloud and AI Annual Recurring Revenue, which reached $900 million. Despite this strong performance, several analyst firms adjusted their price targets for Salesforce. Stifel reduced its target to $375 while maintaining a Buy rating, citing the company’s potential in Agentic AI and the positive influence of its Agentforce platform. Raymond (NSE:RYMD) James also lowered its target to $375, emphasizing the solid bookings and the potential for Salesforce to exceed initial growth guidance. Meanwhile, Canaccord Genuity cut its target to $400 but upheld a Buy rating, noting the company’s consistent cash flow and growth prospects tied to AI.
RBC Capital maintained a $420 target, attributing Salesforce’s revenue growth to early renewals and the significant rise in AI-related revenue. Loop Capital adjusted its target to $300, focusing on the company’s strong CRPO growth driven by early renewals and the future potential of its Agentforce platform. Despite these varied assessments, analysts noted Salesforce’s consistent subscription revenue growth and operating margin guidance meeting expectations. The company’s strategic partnerships with Global System Integrators are also seen as a key factor in promoting its offerings, although they have led to a decline in its professional services business this year.
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