Salesforce (NYSE:CRM), a leading player in enterprise software and customer relationship management (CRM) software, emerged as the top-performing Dow stock in 2023, witnessing an impressive 98.5% surge, outperforming major market indices. Despite this remarkable performance, analysts project further upside for Salesforce, evident in recent target price increases.
The company reported stellar third-quarter results, with revenue reaching $8.72 billion, reflecting an 11% YoY increase. Salesforce’s diverse product portfolio, bolstered by acquisitions like Tableau, Slack, and MuleSoft, positions it as a comprehensive solution provider. Notably, diluted EPS under GAAP skyrocketed by 495.2% to $1.25 in the same quarter.
Strategic collaborations, such as the partnership with retailer Williams-Sonoma and integration with Alphabet’s Google, showcase Salesforce’s commitment to innovation. The incorporation of AI through its Einstein platform enhances predictive analytics, automation, and personalized customer experiences.
As Salesforce heads into its fiscal fourth quarter, management anticipates revenue between $9.18 billion and $9.23 billion, with EPS projected to range from $1.26 to $1.27. Analysts foresee a 10% YoY increase in Q4 revenue to $9.2 billion, with a GAAP net profit of $1.29 per share, indicating a significant turnaround from the year-ago quarter’s loss.
Looking ahead, analysts predict a robust fiscal year 2024, with an 11% growth in revenue and a remarkable 56% growth in earnings. Longer-term projections for fiscal 2025 suggest a continued growth trajectory, with anticipated revenue and earnings increases of 10.8% and 16.6%, respectively.
Despite Salesforce’s exceptional performance in 2023, the stock remains reasonably valued, trading at 28 times forward 2025 earnings and six times forward sales. Analyst sentiment aligns with a “moderate-buy” rating, with 23 analysts suggesting a “strong buy” and only one advocating a “strong sell.”
Several analysts, including Goldman Sachs and Baird, have recently increased their target prices for Salesforce stock. Goldman Sachs’ Kash Rangan envisions a potential upside of 24%, forecasting a surge to $345. Baird’s Rob Oliver upgraded the stock to “outperform,” with a revised target price of $300, emphasizing Salesforce’s margin-driving potential and the possibility of exceeding revenue growth expectations.
In conclusion, Salesforce stock presents a compelling investment opportunity, with its dominant position in the CRM market, strategic diversification, commitment to AI, subscription-based revenue model, and global reach. Analysts’ bullish outlook, coupled with recent target price adjustments, suggests that Salesforce may continue its growth trajectory, making it a stock worth considering for potential investors.
Featured Image: Freepik
Author Faith Yakubu 
