On Monday, CFRA adjusted its outlook for Salesforce.com (NYSE:CRM), increasing the 12-month price target from $343.00 to $380.00. The firm maintained its Strong Buy rating on the stock, citing potential growth driven by the company’s artificial intelligence (AI) strategy.
The analyst at CFRA noted that the new price target is based on a revised price-to-earnings (P/E) ratio of 30 times the calendar year 2026 (CY26) earnings per share (EPS) estimate, which is aligned with peers but remains below historical levels.
The forecast for fiscal year 2025 (ending in January) EPS is held at $10.07, and for FY26 at $11.10, with a new FY27 EPS target initiated at $12.68.
As Salesforce prepares to release its October-quarter results after the market closes on December 3, CFRA anticipates revenues of $9.3 billion, reflecting a 7% year-over-year growth, and an EPS of $2.45. The firm also expects the guidance to align closely with the consensus of $10 billion in revenue and $2.65 EPS.
Despite a slowdown in year-over-year growth rates since the end of the pandemic, CFRA projects that Salesforce will see more favorable comparisons in the future. The firm is optimistic about the company's ability to stabilize growth rates through incremental AI monetization, which could lead to an expansion of the company's multiple in calendar year 2025.
In other recent news, Salesforce reported strong second-quarter earnings, with earnings per share of $2.56, an 8% increase in sales, and a 9% rise in subscription and support revenues. The company also acquired Zoomin and Own Company for $1.9 billion in cash and announced plans to hire 1,000 new employees to support Agentforce sales.
Piper Sandler recently upgraded Salesforce's stock to Overweight and increased the price target by $70, citing confidence in the company's future growth.
Meanwhile, Morgan Stanley (NYSE:MS) sustained an Overweight rating on the company's shares, highlighting the potential of the Agentforce platform. Truist Securities also increased the price target for Salesforce, maintaining a Buy rating due to confidence in the company's new product catalysts. Despite the positive outlook, TD (TSX:TD) Cowen retained a Hold rating on the stock, suggesting that investors might need to be patient to witness substantial impacts from these developments.
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