On Wednesday, Goldman Sachs increased the price target for Salesforce.com (NYSE:CRM) shares to $400 from the previous $360, while reaffirming a Buy rating on the company's stock.
The adjustment follows Salesforce's release of strong third-quarter fiscal year 2025 results and fourth-quarter guidance, which saw the stock climb by 10% in after-hours trading. With a market capitalization of $317 billion and trading near its 52-week high, InvestingPro analysis suggests the stock is slightly undervalued, supported by a "GREAT" financial health rating.
The positive outlook is attributed to the impact of Salesforce's Agentforce and Data Cloud products on the generation of sales pipelines. The company reported signing 200 Agentforce deals within just a week of its launch and noted a significant number of additional deals in the sales process.
The growing integration of customers' data, which exceeds 250 petabytes, is seen as a key factor in the products contributing to Salesforce's fundamental business performance. This success is reflected in the company's impressive 76.35% gross profit margins and sustained revenue growth of 10.26% over the last twelve months.
Goldman Sachs highlighted Salesforce's improved profitability profile, noting the potential for Agentforce to internally deflect approximately 25-50% of inbound communications. This efficiency is part of the rationale for the raised price target.
The analyst firm also pointed to several key tailwinds expected to support subscription revenue growth through the second half of the calendar year 2025. These include macroeconomic improvement, increased AI spending, effective execution of Salesforce's AI strategy, Data Cloud's growth trajectory, and cyclical improvements in the Marketing and Commerce Cloud sectors.
The report concluded with Goldman Sachs expressing confidence in Salesforce's potential to achieve $15-16 in free cash flow per share in the calendar year 2026. This projection is based on the belief that investors will recognize the sustainability of the company's top-line growth, supported by a broad customer base of over 135,000 and the strength of its data-driven value proposition.
Notably, InvestingPro data reveals Salesforce has achieved a perfect Piotroski Score of 9, indicating exceptional financial strength. For deeper insights into Salesforce's valuation and 16 additional ProTips, including detailed financial analysis, consider accessing the comprehensive Pro Research Report available on InvestingPro.
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