Salesforce Stays Strong Despite Market Challenges
Robust Yearly Gains Show CRM’s Competitive Edge
Salesforce, Inc. (CRM), headquartered in San Francisco, boasts a market capitalization of $307.8 billion. Known for its expertise in Customer Relationship Management (CRM) technology, the company offers a wide range of on-demand solutions designed to enhance relationships between businesses and their customers. These services encompass sales, marketing, customer service, analytics, and custom application development.
Over the past year, shares of CRM have shown impressive performance, gaining 52.2% compared to a nearly 36.8% rise in the broader S&P 500 Index ($SPX). However, in 2024, CRM shares have increased by 22.4% year-to-date (YTD), while SPX shares have registered a slightly higher growth of 25.7%.
When compared to the SPDR S&P Software & Services ETF (XSW), CRM has also outperformed. The ETF saw a roughly 45.6% gain over the past year. Yet, CRM’s YTD growth of 22.4% falls behind the ETF’s 22.9% increase.
Despite strong yearly performance, CRM experienced a 2% decline following its earnings announcement for the second quarter of fiscal 2025 on August 28. The company reported revenues of $9.3 billion, reflecting an 8.4% year-over-year increase that met analysts’ expectations.
For the fiscal year ending in January 2025, analysts predict that CRM’s earnings per share (EPS) will grow by 24.6% to $7.55 on a diluted basis. Salesforce has a confirmed track record of exceeding consensus estimates, having beaten projections in each of the last four quarters.
Among 43 analysts following the stock, the consensus rating for CRM is a “Strong Buy.” This rating is based on 30 “Strong Buy” ratings, three “Moderate Buys,” nine “Holds,” and one “Strong Sell.”
This outlook reflects a more optimistic shift compared to two months ago when only 28 analysts rated it a “Strong Buy.”
On October 28, Stifel Financial Corp. (SF) increased its price target for CRM from $320 to $350 while retaining a “Buy” rating. The firm recognizes some uncertainty regarding Salesforce’s agent-based AI capabilities but is holding off on model updates until it receives additional information. Stifel estimates that Salesforce’s Agentforce Service Agent could represent a multi-billion-dollar opportunity, suggesting that the company may be undervalued in light of this potential for ongoing revenue growth.
Currently, CRM’s stock trades above the average price target of $316.05. However, the highest price target on the street is $400, indicating a potential upside of 24.2% from its current market price.
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On the date of publication, Kritika Sarmah did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information, please view the Barchart Disclosure Policy here.
The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.
