Salesforce Faces Challenges as Stock Performance Lags Behind Market
Salesforce, Inc. (CRM), based in San Francisco, California, specializes in customer relationship management software that helps businesses manage sales information. With a market cap of $333 billion, the company also builds applications for sales, customer service, marketing automation, application development, and analytics. These tools, including Slack, Tableau, and MuleSoft, are designed to empower organizations to create custom workflows and improve their operations.
Salesforce’s Stock Struggles Against Market Benchmarks
In the past year, Salesforce’s stock has struggled compared to the overall market. CRM shares rose by 15.7%, while the S&P 500 Index ($SPX) increased by about 22.8%. So far in 2025, CRM stock has decreased by 1.1%, contrasting with the S&P’s 3.4% gain.
Comparison with Technology Sector Performance
Looking specifically at the tech sector, CRM’s performance lags behind the iShares U.S. Technology ETF (IYW), which has surged by approximately 24.7% over the same timeframe. The ETF’s 1.5% YTD gain also surpasses the losses experienced by Salesforce.
Salesforce Contends with Economic Pressures
Several challenges are contributing to Salesforce’s recent struggles. The company is experiencing slower revenue growth as businesses show caution in their spending, influenced by economic uncertainties and geopolitical factors. Many organizations are now opting for smaller, incremental improvements rather than large-scale digital transformations, requiring Salesforce to pivot its strategies. Additionally, foreign exchange fluctuations and stiff competition from Microsoft Corporation (MSFT) and Oracle Corporation (ORCL) burden the company’s near-term outlook.
Latest Earnings Report and Future Expectations
On December 3, Salesforce announced its Q3 results, which included an 11% share increase in the following trading session. The reported adjusted EPS was $2.41, slightly below Wall Street’s expectation of $2.44. However, the revenue of $9.4 billion exceeded estimates of $9.3 billion. For Q4, Salesforce forecasts an adjusted EPS between $2.57 and $2.62, with revenue anticipated between $9.9 billion and $10.1 billion.
Analysts Remain Optimistic About Salesforce
Looking ahead to the current fiscal year, which concludes in January, analysts project a 23.4% EPS growth to $7.48 on a diluted basis. Salesforce has maintained a strong track record, exceeding earnings expectations for the past four quarters.
Among 45 analysts covering CRM, the general consensus is a “Strong Buy,” indicated by 33 “Strong Buy” ratings, three “Moderate Buys,” seven “Holds,” and two “Strong Sells.”
Potential for Stock Price Growth
Analyst J. Parker Lane from Stifel Nicolaus recently reaffirmed a “Buy” rating for CRM with a price target of $425, suggesting a possible upside of 28.5% from current prices. The average price target stands at $397.81, reflecting a 20.3% premium over CRM’s current valuation. Notably, the highest target at $450 hints at an ambitious potential increase of 36%.
On the publication date, Neha Panjwani did not hold any positions in the securities mentioned. The information provided is for informational purposes only. For more details, please refer to the Barchart Disclosure Policy.
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