On Tuesday, Piper Sandler expressed a positive outlook on Salesforce.com, Inc. (NYSE:NYSE:CRM), raising the stock's rating from Neutral to Overweight and increasing the price target to $325 from the previous $268. The firm's decision is based on the anticipation of a significant rise in Salesforce's free cash flow (FCF) per share.
The analysis by Piper Sandler suggests that Salesforce's FCF per share could potentially double to over $20 by fiscal year 2029 (calendar year 2028) from $9.65 in fiscal year 2024 (calendar year 2023). This projection holds even if Salesforce's top-line growth remains at a modest rate of 8-9%.
The firm noted that Salesforce's valuation multiples, including enterprise value to sales (EV/S), enterprise value to free cash flow (EV/FCF), and price to earnings (P/E), are the lowest among its large-cap software peers.
Piper Sandler's confidence in Salesforce has been bolstered by recent discussions with the company's leadership, partners, and customers. These conversations have led to the belief that Salesforce's new pricing and packaging strategies could expand the adoption of its multi-cloud offerings.
Additionally, the introduction of Agentforce, powered by the Atlas (NYSE:ATCO) Reasoning Engine, in conjunction with the Data Cloud, is expected to help stabilize demand or possibly drive a recovery as the company moves into calendar year 2026 (fiscal year 2027).
The firm has adjusted its estimates for Salesforce and has applied a target enterprise value to free cash flow multiple of 23 times, up from the previous 22 times. Furthermore, Piper Sandler has lowered the discount rate used in its valuation from 16% to 14%, contributing to the higher price target.
Salesforce's stock is now poised for potential growth according to the investment firm's analysis, with the revised price target reflecting an optimistic outlook for the company's financial performance in the coming years.
In other recent news, Salesforce.com has reported strong second-quarter earnings, with earnings per share reaching $2.56, exceeding the consensus estimate of $2.36. The company also noted an 8% increase in sales, primarily driven by a 9% rise in subscription and support revenues. Salesforce has also entered into a definitive agreement to acquire Own Company, a data protection and management solutions provider, for $1.9 billion in cash.
The company's recent DreamForce conference showcased Agentforce, a significant development in AI Agent platforms, which has been met with enthusiasm. This AI-driven suite of autonomous bots has reportedly sparked interest and could potentially re-accelerate subscription revenue growth.
Analyst firms such as BofA Securities, TD Cowen, Needham, and Baird have maintained their ratings on Salesforce, while Truist Securities revised its price target for Salesforce to $300, maintaining a Buy rating.
However, Erste Group downgraded the stock from Buy to Hold due to projected slower growth. Salesforce also announced a partnership with IBM (NYSE:IBM) to integrate advanced AI capabilities into its platform and reported a significant increase in the adoption of its Data Cloud platform, with a 130% year-over-year growth in its paid customer base. These are among the recent developments in Salesforce's ongoing efforts to remain at the forefront of the CRM industry.
InvestingPro Insights
Piper Sandler's upbeat assessment of Salesforce.com, Inc. (NYSE:CRM) is mirrored in the company's strong financial health and investment potential as indicated by the latest data from InvestingPro. Salesforce boasts an impressive gross profit margin of 76.35% for the last twelve months as of Q2 2025, highlighting the company's efficiency in generating revenue relative to its cost of sales. This robust margin underpins the firm's positive outlook on Salesforce's ability to expand its free cash flow in the years ahead.
In addition, Salesforce's management has demonstrated confidence in the company's prospects through aggressive share buybacks, a strategy that often reflects a belief in the stock's undervaluation and a commitment to enhancing shareholder value. This aligns with Piper Sandler's raised price target and suggests that the company's leadership is also optimistic about Salesforce's future performance.
InvestingPro also notes that Salesforce is trading at a low P/E ratio relative to near-term earnings growth, with a P/E ratio of 45.46 and an adjusted P/E ratio for the last twelve months as of Q2 2025 at 41.92. This could indicate that the stock is undervalued given the company's earnings prospects, further supporting the potential for stock price appreciation.
For investors seeking comprehensive analysis and additional insights, there are 13 more InvestingPro Tips available for Salesforce, which can be explored for a deeper understanding of the company's financials and market position. These tips can be accessed through the InvestingPro platform at https://www.investing.com/pro/CRM, providing valuable information to help make informed investment decisions.
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