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Investing.com -- DA Davidson upgraded Salesforce to Neutral from Underperform, saying the stock’s steep slide this year has already captured the slowdown in the company’s core business and rising competition.
Shares of Salesforce have lagged the broader cloud software index by nearly 50 percentage points this year, including a 27-point drop since reporting first-quarter results in late May.
DA Davidson said sentiment toward the stock has deteriorated sharply, as investors see little near-term reacceleration and continued pressure from rivals targeting core customer segments.
The brokerage kept its $225 price target, based on 18.5 times its 2027 earnings forecast.
Analysts noted that another round of activist involvement could act as a catalyst, after investor Starboard Value boosted its stake by 47% in the latest quarter. DA Davidson said renewed pressure from activists may push management to focus on margins and pause acquisitions.
The firm said Salesforce is prioritizing its Agentforce AI platform, but that the bet on generative AI may be too early given adoption bottlenecks such as data silos and limited visibility into costs.
It expects expansion of Agentforce to come at the expense of slower growth in the core sales, service and marketing clouds.
DA Davidson projects 8% revenue growth in fiscal 2026 and 7% in fiscal 2027, excluding the Informatica consolidation.