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Investing.com - Wells Fargo has lowered its price target on Salesforce (NYSE:CRM) to $265 from $275 while maintaining an Equal Weight rating, citing slower-than-anticipated adoption of the company’s AI offerings. With a current market capitalization of $245.17 billion and trading at $256.45, InvestingPro analysis suggests the stock is slightly undervalued based on its proprietary Fair Value model.
The firm noted that Salesforce’s lack of a fiscal year guidance raise despite a decent second quarter suggests less upside for the remainder of the year than previously expected. Wells Fargo remains balanced on the stock until greater signs of a catalyst emerge, with Agentforce uptake proving slower than anticipated. According to InvestingPro data, the company maintains impressive gross profit margins of 77.34% and boasts a "GREAT" overall Financial Health Score of 3.11, suggesting strong fundamental performance despite near-term challenges.
Salesforce reported Data Cloud and AI annual recurring revenue (ARR) of $1.2 billion, up $200 million sequentially and 120% year-over-year for the third straight quarter, representing approximately 3% of annualized subscription revenues. The company highlighted 12,000 total Agentforce customers, up 50% sequentially from 8,000 last quarter, including 6,500 paid customers compared to 4,000 in the previous quarter. With total revenue reaching $38.59 billion in the last twelve months, these AI initiatives represent a growing portion of Salesforce’s business. For deeper insights into Salesforce’s growth metrics and comprehensive analysis, check out the detailed Pro Research Report available on InvestingPro.
Wells Fargo indicated that Salesforce’s second-quarter upside was "largely one-time in nature," derived from license revenue recognition, especially from MuleSoft and Tableau, as well as the timing of professional services. The firm also noted that public sector performance was "more measured" and in line with prior expectations.
Recent pricing changes that took effect August 1 are expected to boost bookings rather than revenues for fiscal year 2026, while the Informatica acquisition could now close in fiscal year 2026 versus the first half of 2027 as previously expected.
In other recent news, Salesforce.com reported its fiscal second-quarter results, showing a 9% revenue growth in constant currency and a 10% increase in current remaining performance obligation (cRPO). The company achieved a non-GAAP operating margin of 34.3%, maintaining its fiscal year 2026 revenue outlook while raising guidance for operating cash flow and free cash flow. Despite these positive results, Bernstein lowered its price target for Salesforce to $221, citing soft guidance that disappointed investors, although the company slightly exceeded revenue expectations.
JPMorgan adjusted its price target for Salesforce from $380 to $365, maintaining an Overweight rating, and noted that the company’s results exceeded expectations in revenue and cRPO metrics. Canaccord Genuity also lowered its price target from $350 to $300, maintaining a Buy rating, while UBS reiterated its Neutral rating with a $260 price target after Salesforce’s earnings aligned with its estimates. Barclays maintained its Overweight rating with a $316 price target, highlighting the company’s efforts to enhance sales efficiency through AI, though growth acceleration has yet to be observed. These developments reflect a mixed sentiment among analysts regarding Salesforce’s financial performance and future outlook.
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