Source: Davit Kirakosyan
CFRA Raises Price Target for Salesforce.com
CFRA, a leading provider of independent investment research, has significantly increased its price target for Salesforce.com (NYSE:CRM), the globally renowned cloud-based software company, to $380 from its previous position of $343, maintaining an encouraging Strong Buy rating. This revision is a testament to Salesforce’s robust growth prospects and potential for margin expansion, with a special focus on the monetization of artificial intelligence (AI).
Higher Projected P/E Ratio Underpins Revised Price Target
The new price target is based on an elevated projected price-to-earnings (P/E) ratio of 30x for the 2026 EPS estimates. This revised ratio aligns with Salesforce’s peers but still stands below the company’s historical averages. This suggests that the analysts are factoring in a relatively conservative scenario in their valuation, acknowledging the current market dynamics without overly relying on past performance.
Earnings projections for the company have been held steady at $10.07 for the fiscal year 2025, $11.10 for 2026, and were newly initiated at $12.68 for 2027. These projections indicate a steady increase in earnings, reflecting the company’s continued growth trajectory.
Anticipated Q4 Results and Market Expectations
Prior to the release of its October-quarter results, due to be announced today after the market close, Salesforce was projected to report a revenue of $9.3 billion. This represents a 7% year-over-year growth and an EPS of $2.45. The market anticipates the company’s guidance to align closely with these expectations, predicting a revenue of $10 billion and an EPS of $2.65 for the subsequent quarter.
Renewed Momentum Amid Post-Pandemic Growth Deceleration
Despite the deceleration in growth rates since the peak of the pandemic, CFRA analysts foresee a revival of momentum for Salesforce. This optimism is based on the easing of year-over-year comparisons and the stabilizing effect of incremental AI monetization. Salesforce’s AI strategy, including the rollout of its AI platform Agentforce, is expected to gain traction across enterprise markets by the second half of 2025.
Another contributing factor to the renewed momentum is Salesforce’s usage-based pricing approach. This strategy is seen as a key element in balancing the pressure on subscription revenue resulting from do-it-yourself and productivity-related gains. By tying usage to cost, Salesforce can ensure sustained revenue growth even as customers become more efficient in their use of the platform.
Future Upside for Salesforce
With net cash reserves of $9.2 billion and an expected increase in free cash flow to over $13 billion by 2026, CFRA analysts project further upside for Salesforce. As the company continues to capitalize on its AI initiatives and broaden its appeal among enterprise clients, its financial position is expected to strengthen even further. This anticipated growth reflects Salesforce’s strategic initiatives and its capacity to adapt to evolving market trends, showcasing the company as a strong contender in the competitive landscape of software services.