Even a sharp selloff in Salesforce stock Thursday — down as much as 21% intraday — isn’t keeping some analysts on Wall Street from sticking with their optimistic outlooks on the maker of customer relationship management software. Salesforce disappointed Wall Street with a sharp first-quarter revenue miss , which hasn’t happened since 2006. Salesforce executives tied the disappointing results to elongated deal cycles throughout the first quarter that hit the company’s booking schedule. The company’s softer-than-expected second-quarter outlook also fueled the selloff. CRM 1D mountain Shares of Salesforce were under pressure on Thursday after missing first-quarter revenue estimates. But the largest firms on Wall Street, from Goldman Sachs to Morgan Stanley to JPMorgan Chase, are not abandoning ship. In all three cases, analysts say that potential tailwinds from a still developing artificial intelligence cycle have yet to play out, and that increased investor patience is required. “We continue to view GenAI as a tailwind for Salesforce, with benefits likely coming in CY25,” Morgan Stanley analyst Keith Weiss wrote in a Thursday note in reaction to Salesforce’s latest numbers. Weiss reiterated an overweight rating on Salesforce, albeit with a $320 per share price target, down from $350. His new forecast implies roughly 18% upside ahead from the stock’s $271.62 close on Wednesday. AI call option “[B]ut at these levels, GenAI represents a call option,” Weiss cautioned. The analyst also spoke to the Salesforce’s longer-than-expected deal cycles throughout the first-quarter, which he says will ease over time. “Longer term, better aligning sales teams by market and reducing complexity in the organizational layers of the business are benefits to operational efficiency,” Weiss said. Goldman Sachs analyst Kash Rangan reiterated a buy rating on Salesforce stock, but lowered his price target to $315 per share from $345. Rangan’s outlook equates to roughly 16% upside moving forward, again based on Wednesday’s close. “While acknowledging investors’ need to gain confidence in the trajectory of top-line growth and potential re-acceleration, we believe there are both macro and micro reasons for optimism,” Rangan said. “We note both headwinds from interest rates easing, uncertainty abating after this year’s elections, and outsized growth potential from Gen-AI could all serve as growth catalysts.” Rangan views Salesforce as “an under-appreciated Gen-AI winner,” adding that the company has room to improve its profit margins regardless of the macroeconomic backdrop. JPMorgan analyst Mark Murphy said that the selloff in Salesforce stock is “overdone,” and that investors are largely overlooking the company’s still strong free cash flow generation and its unchanged full-year forecast as well as 2025 estimates. The analyst reiterated an overweight rating on the stock with a $300 per share price target, or about 10% upside from yesterday’s close. Citigroup, however, dissented in its assessment of ehat it called Salesforce’s “alarming” quarterly results. Analyst Tyler Radke stood by a neutral rating on the stock, and lowered his price target to $260 per share from $323, down 20%. Radke’s new target implied about 4% downside ahead, based on Wednesday’s price. “[W]ith slowing growth, lack of de-risked estimates and more active M & A we are comfortable on the sidelines awaiting improving growth or more evidence of Data Cloud/GenAI momentum/monetization,” Radke warned.
Original news source Credit: www.cnbc.com
Business News, Earnings, Investment strategy, Markets, Salesforce Inc
Analysts defend Salesforce, saying the selloff is overdone and AI impact is ahead added by News89 Team on
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