By Sam Boughedda
Salesforce (NYSE:CRM) shares have declined 44% this year and 49% in 2022, but Baird analysts labeled the stock as attractive in a note to clients on Wednesday.
They reiterated an Outperform rating and $230 price target on the stock in a note.
"With increased investor focus on FCF, we view CRM as an attractive large-cap investment," stated the analysts.
"While growth-to-FCF transition stories can take time to play out, we believe CRM's multi-year stock underperformance discounts some growth investor exodus (since 2020, CRM stock -12% vs. S&P500 +11%). In the wake of CRM's investor day, we provide 'blue sky' long-term FCF framework," they added.
Baird's base-case $11.60 FCF/share for FY26E assumes revenue slightly below the $50 billion target and 25% operating margins. "Yes, it's a 'show-me' story, but one where we see opportunity for growth, share gains, and strong FCF," the analysts stated.
At the end of September, Business Insider reported that Salesforce had "quietly become a giant government contractor" after racking up over 1,400 deals with federal agencies.