Salesforce's Growth Impresses Analysts, but Caution Keeps Some on the Sidelines

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ICARO Media Group
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29/08/2024 20h22

Salesforce, Inc. (CRM) witnessed a surge of over 4% in its after-hours trading on Wednesday, following the release of its impressive quarterly results. The customer relationship management platform provider reported beating expectations and raising its outlook. However, while CNBC Mad Money host Jim Cramer praised the company's "unstoppable" growth, Piper Sandler analyst Brent Bracelin remained cautious about the future.

Chairman and CEO Marc Benioff proudly showcased Salesforce's remarkable achievements, highlighting its substantial revenue growth. He revealed that the company's revenue rocketed from $4.1 billion in fiscal year 2014 to a staggering $38 billion in 2025. Benioff also emphasized the company's profitability, predicting that margins would nearly double from 16.8% in 2020 to 32.8% in 2025.

Cramer took to Twitter to echo Benioff's sentiments, describing Salesforce's growth as "real deal acceleration." The impressive figures and positive outlook from the CEO resonated with the Mad Money host, underscoring his confidence in the company's future prospects.

Benioff's post on the social media platform also mentioned a potential game changer for Salesforce called "AgentForce." This low-code/no-code platform aims to revolutionize sales and engagement by using cutting-edge AI to build autonomous agents capable of providing advice and executing tasks. Benioff referred to this development as the beginning of a new era for the company.

While impressed by the better-than-expected results, Piper Sandler analyst Brent Bracelin opted to maintain a neutral stance on Salesforce. He did, however, raise the price target from $250 to $268, suggesting a modest 3.5% upside. Bracelin cited the company's forex-neutral growth of 9% and an 11% rebound in current remaining performance obligation (cRPO) as contributing factors to the upward price target revision. The analyst also noted a margin expansion from 32.1% to 33.7% in the second quarter.

Bracelin expressed caution regarding the second-half growth forecast of 8%, suggesting a potential moderation due to two years of measured spending and industry constraints in the Americas region. Additionally, ongoing macroeconomic uncertainty, the pending departure of the CFO, and the transition from applications to agents were identified as factors that kept Piper Sandler on the sidelines. The analyst stressed the need for further signs of demand stabilization and sustained top-line growth before altering their neutral rating.

Following the release of the earnings report, Salesforce shares experienced a 4.09% increase in after-hours trading, reaching $269.50. This followed a regular session where the stock declined by 2.01% to close at $258.90.

While Salesforce's impressive growth and positive outlook garnered praise from some analysts, caution remains among certain industry experts. The company's ability to stabilize and sustain growth, particularly amid potential economic headwinds and internal transitions, will likely be closely watched in the coming months.

The views expressed in this article do not reflect the opinion of ICARO, or any of its affiliates.

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