Citi Cuts Salesforce Price Target to $188 Ahead of Q1 Results
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 1 day ago
0mins
Should l Buy CRM?
Source: seekingalpha
- Price Target Reduction: Citi has lowered its price target for Salesforce from $200 to $188, indicating a cautious outlook ahead of the upcoming fiscal 2027 Q1 financial results, reflecting concerns about deal cycles and portfolio optimization.
- Earnings Estimates Cut: The analysts have slightly reduced their adjusted earnings per share estimates for Salesforce, lowering FY27 from $13.18 to $13.11, which raises concerns about the company's profitability amid increasing customer optimization needs during renewals.
- Growth Deceleration Expected: Salesforce's organic cRPO growth is anticipated to meet expectations at around 9% year-over-year for Q1, but guidance for Q2 is expected to decelerate slightly to 8-8.5%, potentially impacting investor confidence in the company's future growth trajectory.
- Market Reaction Anticipated: Salesforce is set to release its Q1 results post-market on May 27, with consensus estimates calling for adjusted EPS of $3.12 and revenue of $11.06 billion, and any failure to meet these expectations could negatively affect the stock price.
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Analyst Views on CRM
Wall Street analysts forecast CRM stock price to rise
39 Analyst Rating
29 Buy
9 Hold
1 Sell
Moderate Buy
Current: 165.840
Low
223.00
Averages
326.40
High
405.00
Current: 165.840
Low
223.00
Averages
326.40
High
405.00
About CRM
Salesforce, Inc. is a customer relationship management (CRM) technology company. Its artificial intelligence (AI) powered Agentforce 360 Platform offers sales, service, marketing, commerce, collaboration, data management, integration, analytics, and information technology (IT) service solutions. It enables customers to build and deploy digital labor for employees and customers, leveraging autonomous AI agents across business functions. Its service offerings include Agentforce Sales, Agentforce Service, Agentforce 360 Platform, Slack and Others. The Agentforce Sales provides sales capabilities and tools built for organizations across prospecting, sales engagement, team collaboration, sales analytics and AI, sales programs, sales performance, partner management, and revenue and orders. The Agentforce Service provides field service solutions that enable companies to connect service agents, dispatchers and mobile employees through platform to schedule, dispatch and manage jobs.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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- Cash Flow and Buyback Plans: The company saw a 16% increase in free cash flow to $14.4 billion for the year and returned $14.3 billion to shareholders, while authorizing a $50 billion stock repurchase program, demonstrating commitment to shareholder value.
- Rapid AI Business Growth: The Agentforce platform achieved $800 million in annual recurring revenue, up 169% year-over-year, and combined with Data 360, AI-related revenue exceeded $2.9 billion, marking over 200% growth and indicating AI as a new growth driver.
- Ongoing Market Concerns: Despite Salesforce's proactive measures to address AI threats, such as launching the “Agentic Enterprise License Agreement,” fears that AI may undermine the software-as-a-service model persist, putting pressure on the stock price.
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- Strategic Partnership Context: This contract is part of a larger $5.6 billion agreement signed with the Department of Defense, which was discussed during Salesforce's fiscal Q4 earnings call, highlighting the company's potential for expansion in the government sector.
- Market Reaction: Despite securing this major contract, Salesforce shares fell 0.7% in premarket trading, reflecting market caution regarding the company's future performance, possibly linked to the upcoming Q1 earnings report.
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- Rise of Subscription Model: Salesforce introduced the concept of software rental in 1999, transforming the traditional one-time purchase model into a monthly billing system, which significantly enhanced customer retention and revenue stability by promoting acceptance of more flexible upgrade paths.
- Adobe's Transformation: In 2013, Adobe announced the discontinuation of Creative Suite DVDs in favor of the Creative Cloud subscription service, which, despite initial user backlash, ultimately led to predictable revenue streams and a stock price increase of threefold from 2013 to 2015, setting a benchmark for the industry.
- Diverse Billing Models: With the rise of cloud computing, companies like Amazon AWS adopted a pay-as-you-go billing model, allowing businesses to pay based on actual usage of computing power and storage, which, while enhancing cost efficiency, introduced budgeting uncertainties for finance teams.
- Future Hybrid Billing: By 2026, software billing is expected to blend base subscriptions, per-seat fees, and usage charges, requiring companies to balance predictable base payments with variable components to adapt to evolving market demands.
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- Price Target Reduction: Citi has lowered its price target for Salesforce from $200 to $188, indicating a cautious outlook ahead of the upcoming fiscal 2027 Q1 financial results, reflecting concerns about deal cycles and portfolio optimization.
- Earnings Estimates Cut: The analysts have slightly reduced their adjusted earnings per share estimates for Salesforce, lowering FY27 from $13.18 to $13.11, which raises concerns about the company's profitability amid increasing customer optimization needs during renewals.
- Growth Deceleration Expected: Salesforce's organic cRPO growth is anticipated to meet expectations at around 9% year-over-year for Q1, but guidance for Q2 is expected to decelerate slightly to 8-8.5%, potentially impacting investor confidence in the company's future growth trajectory.
- Market Reaction Anticipated: Salesforce is set to release its Q1 results post-market on May 27, with consensus estimates calling for adjusted EPS of $3.12 and revenue of $11.06 billion, and any failure to meet these expectations could negatively affect the stock price.
See More
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- Market Share Recovery: Through cost-cutting, restructuring, and new management, Intel has achieved growth in its data center and AI segments, particularly driven by increased demand for central processing units (CPUs), highlighting its increasingly vital role in the AI ecosystem.
- Upgraded Earnings Forecast: Analysts now project Intel's earnings per share to reach $1.53 in fiscal 2027, representing a 40.4% increase from 2026's average estimates, providing a clear runway for high-margin growth, although its valuation has significantly risen with a forward P/E ratio of 115.
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See More
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- Strong Performance Yet Declining Stock: Salesforce reported $11.2 billion in revenue for Q4 FY2026, a 12% year-over-year increase, but the stock has dropped over 30% in 2026, reflecting market concerns about AI's impact.
- Cash Flow and Buyback Plans: The company saw a 16% increase in free cash flow to $14.4 billion for the year and returned $14.3 billion to shareholders, while authorizing a $50 billion stock repurchase program, demonstrating commitment to shareholder value.
- Rapid AI Business Growth: The Agentforce platform achieved $800 million in annual recurring revenue, up 169% year-over-year, and combined with Data 360, AI-related revenue exceeded $2.9 billion, marking over 200% growth and indicating AI as a new growth driver.
- Ongoing Market Concerns: Despite Salesforce's proactive measures to address AI threats, such as launching the “Agentic Enterprise License Agreement,” fears that AI may undermine the software-as-a-service model persist, putting pressure on the stock price.
See More
Salesforce Secures $72M Contract with U.S. Air Force
- Significant Contract Value: Salesforce has been awarded a $72 million enterprise license agreement by the U.S. Air Force, aimed at consolidating its various point solutions into a single platform, thereby enhancing operational efficiency and management capabilities.
- Strategic Partnership Context: This contract is part of a larger $5.6 billion agreement signed with the Department of Defense, which was discussed during Salesforce's fiscal Q4 earnings call, highlighting the company's potential for expansion in the government sector.
- Market Reaction: Despite securing this major contract, Salesforce shares fell 0.7% in premarket trading, reflecting market caution regarding the company's future performance, possibly linked to the upcoming Q1 earnings report.
- AI Platform Utilization: Merck & Co. has selected Salesforce's AI CRM to develop a 360° animal health platform, further demonstrating Salesforce's competitiveness and market demand in AI and industry-specific solutions.
See More
The Evolution and Future of Software Subscription Models
- Rise of Subscription Model: Salesforce introduced the concept of software rental in 1999, transforming the traditional one-time purchase model into a monthly billing system, which significantly enhanced customer retention and revenue stability by promoting acceptance of more flexible upgrade paths.
- Adobe's Transformation: In 2013, Adobe announced the discontinuation of Creative Suite DVDs in favor of the Creative Cloud subscription service, which, despite initial user backlash, ultimately led to predictable revenue streams and a stock price increase of threefold from 2013 to 2015, setting a benchmark for the industry.
- Diverse Billing Models: With the rise of cloud computing, companies like Amazon AWS adopted a pay-as-you-go billing model, allowing businesses to pay based on actual usage of computing power and storage, which, while enhancing cost efficiency, introduced budgeting uncertainties for finance teams.
- Future Hybrid Billing: By 2026, software billing is expected to blend base subscriptions, per-seat fees, and usage charges, requiring companies to balance predictable base payments with variable components to adapt to evolving market demands.
See More
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- Outstanding Stock Performance: Since being removed from the Dow on August 31, 2020, ExxonMobil has achieved a staggering 373% total return, demonstrating its strong recovery capability amid market volatility and attracting increased investor interest.
- Successful Strategic Adjustments: In its corporate plan released in 2025, ExxonMobil expects to achieve $25 billion in earnings growth and $35 billion in cash flow growth by 2030, indicating a focus on sustainable development through efficiency improvements rather than capital expenditures.
- High Return on Investment: ExxonMobil forecasts a return on capital employed exceeding 17% by 2030, with cumulative surplus cash flow projected to reach $145 billion under the assumption of $65 Brent crude oil prices, further enhancing its financial robustness.
- Dividend Stability: With 43 consecutive years of dividend increases, ExxonMobil stands out as a favored high-dividend stock for investors, reflecting its stability and attractiveness in uncertain market conditions.
See More
Citi Cuts Salesforce Price Target to $188 Ahead of Q1 Results
- Price Target Reduction: Citi has lowered its price target for Salesforce from $200 to $188, indicating a cautious outlook ahead of the upcoming fiscal 2027 Q1 financial results, reflecting concerns about deal cycles and portfolio optimization.
- Earnings Estimates Cut: The analysts have slightly reduced their adjusted earnings per share estimates for Salesforce, lowering FY27 from $13.18 to $13.11, which raises concerns about the company's profitability amid increasing customer optimization needs during renewals.
- Growth Deceleration Expected: Salesforce's organic cRPO growth is anticipated to meet expectations at around 9% year-over-year for Q1, but guidance for Q2 is expected to decelerate slightly to 8-8.5%, potentially impacting investor confidence in the company's future growth trajectory.
- Market Reaction Anticipated: Salesforce is set to release its Q1 results post-market on May 27, with consensus estimates calling for adjusted EPS of $3.12 and revenue of $11.06 billion, and any failure to meet these expectations could negatively affect the stock price.
See More
Intel's Stock Surge Reshapes Market Position in the AI Era
- Significant Stock Recovery: Intel's stock has surged over 240% since its removal from the Dow, with a remarkable 377% increase since November 2024, now boasting a market cap exceeding $640 billion, making it the 15th largest component in the S&P 500, indicating a strong market rebound potential.
- Market Share Recovery: Through cost-cutting, restructuring, and new management, Intel has achieved growth in its data center and AI segments, particularly driven by increased demand for central processing units (CPUs), highlighting its increasingly vital role in the AI ecosystem.
- Upgraded Earnings Forecast: Analysts now project Intel's earnings per share to reach $1.53 in fiscal 2027, representing a 40.4% increase from 2026's average estimates, providing a clear runway for high-margin growth, although its valuation has significantly risen with a forward P/E ratio of 115.
- Intensifying Industry Competition: Despite Intel's strong recovery momentum, Nvidia's market cap remains eight times larger than Intel's, and its greater influence in the Dow underscores the need for Intel to continue enhancing its competitiveness to potentially reclaim a spot in the index.
See More
