On Wednesday, BMO (TSX:BMO) Capital Markets updated its outlook on Salesforce.com Inc (NYSE:CRM), raising the stock's price target from $385.00 to $425.00, while maintaining an Outperform rating. The adjustment follows Salesforce's recent financial performance, which the analyst noted as solid, with the company exceeding its previous growth guidance for the October quarter.
The company's strong position is reflected in its impressive 76.35% gross profit margins and perfect Piotroski Score of 9, according to InvestingPro data.
The analyst highlighted that Salesforce's current deferred revenue and performance obligations (CRPO) year-over-year constant currency growth surpassed expectations set by the guidance for the October quarter by approximately 150 basis points. Furthermore, the guidance for the January quarter's CRPO aligns with the analyst's and consensus estimates, indicating a steady outlook. This performance is backed by solid revenue growth of 10.26% over the last twelve months, with InvestingPro analysis revealing 14 additional key insights about the company's growth trajectory.
Salesforce's long-term prospects were also a factor in the revised price target, with particular attention given to the potential of Agentforce and the Data Cloud. These innovations are expected to draw greater investor interest due to their potential to drive new technology adoption and growth opportunities for the company.
Despite Salesforce trading at a premium compared to its recent trading ranges, the analyst believes that the company's potential to return to double-digit growth justifies a higher trading range. The new price target of $425 reflects confidence in Salesforce's growth trajectory and the analyst's continued endorsement of the stock with an Outperform rating.
In other recent news, Salesforce has been making notable strides in the business arena. The company has reported a revenue growth of 10.26% and has been recognized for its financial health by InvestingPro. The launch of Agentforce 2.0, a mere six weeks after the original version, signals significant potential for the company. However, Salesforce's outgoing CFO, Amy Weaver, has cautioned that it may still be too early for Agentforce to significantly contribute to the company's financials.
Analysts from various firms have shown confidence in Salesforce's performance. Scotiabank (TSX:BNS) increased Salesforce's target to $440, Truist Securities to $400, and JPMorgan (NYSE:JPM) to $380. In addition, Mizuho (NYSE:MFG) Securities lifted the target to $425, and Oppenheimer revised it upwards to $415. These upgrades follow Salesforce's reported growth in current remaining performance obligations (cRPO), indicating future revenue under contract, and a robust forecast for the fourth fiscal quarter.
Salesforce's new product, Agentforce, has seen substantial upsell activities among existing Service Cloud customers. The company also made slight upward revisions to its fiscal year 2025 estimates, increasing its revenue, operating margin, and free cash flow margin guidance.
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