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Investing.com - UBS maintained its Neutral rating and $260.00 price target on Salesforce (NYSE:CRM) following the company’s second-quarter earnings report that met but did not exceed expectations. According to InvestingPro data, Salesforce maintains a "GREAT" overall financial health score, with particularly strong performance in growth and profitability metrics.
Salesforce reported 9% total revenue growth and 10% current remaining performance obligation (cRPO) growth in the July quarter, with 34% margins, all aligning with UBS estimates. The company reaffirmed its fiscal year 2026 outlook of 8% growth and 34% margins. Notably, InvestingPro data shows the company maintains impressive gross profit margins of 77.34%, though it currently trades at a relatively high P/E ratio of 39.5x.
The forecast indicates a further one-percentage-point deceleration in both revenue and cRPO growth for the third quarter, slowing to 8% and 9% respectively, which UBS suggests may negatively impact investor sentiment despite potential conservatism in the guidance.
UBS noted that despite Salesforce’s strong growth in AI/Data segments and recent price increases, the company did not raise its full-year outlook, which may disappoint investors looking for signs of accelerating growth.
While Salesforce expressed confidence in its fourth-quarter pipeline and bookings, suggesting that a significant deceleration in cRPO was unlikely, UBS believes investors will require "more tangible proof points" that Salesforce’s growth will accelerate to 10%+ in fiscal year 2027 before returning to the stock.
In other recent news, Salesforce.com reported its Q2 2025 earnings, surpassing Wall Street expectations with an earnings per share (EPS) of $2.91, compared to the forecasted $2.78. The company achieved revenue of $10.25 billion, slightly above the anticipated $10.14 billion. Despite these positive results, Bernstein analyst Mark Moerdler lowered the company’s price target to $221 from $255, maintaining an Underperform rating due to soft guidance that disappointed investors. Meanwhile, Barclays has reiterated its Overweight rating with a price target of $316, acknowledging a disconnect in Salesforce’s investment case despite increased sales capacity and AI implementation. KeyBanc also lowered its price target to $400 from $440, citing a negative narrative in the application software sector that affects Salesforce shares. On a positive note, Goldman Sachs reaffirmed its Buy rating with a $385 price target, expressing optimism about AI while noting the company’s slight revenue and operating margin outperformance. These recent developments highlight diverse analyst perspectives on Salesforce’s financial health and future prospects.
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