On Thursday, CFRA maintained its Strong Buy rating and $300.00 price target for Salesforce.com (NYSE:CRM), following the company's latest earnings report. Salesforce posted earnings per share (EPS) of $2.56 for the July quarter, surpassing the consensus estimate of $2.36 and the previous year's $2.12 figure.
This performance was accompanied by an 8% increase in sales, which slightly exceeded expectations, driven by a 9% rise in subscription and support revenues.
The company's guidance for the October quarter suggests a revenue growth deceleration to 7%, but the full-year outlook for fiscal year 2025 remains unchanged at 8%-9%. Salesforce has also demonstrated notable operating margin expansion, which increased by 210 basis points to reach 33.7%.
CFRA's analyst highlighted the potential of Salesforce's artificial intelligence initiatives, particularly the Agentforce platform, which is expected to become generally available in October.
This platform aims to provide autonomous enterprise AI agents for various functions such as sales, services, marketing, and commerce. Despite the acknowledgment that monetizing AI initiatives will take time, the analyst expressed optimism due to the company securing 1,500 AI-related deals during the quarter.
In addition to these developments, Salesforce's Chief Financial Officer, Amy Weaver, has announced plans to step down in early calendar year 2025. Weaver has committed to remaining on board to assist with the search for her successor.
Furthermore, CFRA forecasts that Salesforce will generate free cash flow (FCF) of over $12 billion in fiscal year 2025 and more than $13 billion in fiscal year 2026. These projections contribute to the firm's continued confidence in Salesforce's stock performance.
In other recent news, Salesforce.com has been the focus of multiple financial firms, with several adjusting their price targets and rating outlooks. TD Cowen, BMO Capital Markets, Canaccord Genuity, and Loop Capital have all raised their price targets for Salesforce, reflecting confidence in the company's growth trajectory.
Salesforce's second-quarter calculated remaining performance obligation (cRPO) growth surpassed its own guidance and its new AI agent platform, AgentForce, is seen as a significant area of growth focus.
In addition, Salesforce's strategic shift towards a business model more focused on consumption-based transactions rather than seat-based sales was highlighted. BMO Capital Markets maintained its Outperform rating and raised its price target, reflecting an optimistic view of Salesforce's ability to navigate the industry's evolving landscape.
Canaccord Genuity also maintained a Buy rating, citing Salesforce's significant presence within large customer organizations and an expected uptick in growth driven by pricing strategies and an AI consumption cycle.
Meanwhile, Loop Capital adjusted its price target for Salesforce, citing improvement in its cRPO growth. Salesforce's Data Cloud business and its GenAI solutions were noted as key to achieving double-digit growth. Oppenheimer also raised its price target for Salesforce, noting the company's record operating margin and upward revision of fiscal year 2025 operating margin and cash flow projections.
InvestingPro Insights
As Salesforce.com (NYSE:CRM) continues to impress with its latest earnings report and strong guidance, insights from InvestingPro further illuminate the company's financial health and market position. With a robust market capitalization of $250.53 billion, Salesforce is trading at a high earnings multiple, with a P/E ratio of 44.81, reflecting investor confidence in its growth prospects. This is supported by an impressive gross profit margin of 76.0% over the last twelve months as of Q1 2023, highlighting the company's efficiency in generating earnings relative to its revenue.
InvestingPro Tips reveal Salesforce's perfect Piotroski Score of 9, indicating top-notch financial health, and the company's ability to sufficiently cover interest payments with its cash flows, suggesting a sound debt management strategy. Additionally, Salesforce is recognized as a prominent player in the Software industry, which aligns with CFRA's positive outlook on the company's innovative AI initiatives like the Agentforce platform.
For readers seeking a deeper dive into Salesforce's financial metrics and strategic positioning, InvestingPro offers a comprehensive set of additional tips, including insights on Salesforce's profitability this year and over the last decade, as well as its valuation multiples. To explore these valuable tips, visit InvestingPro for further details.
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