Salesforce Earnings Fail to Boost Market Confidence
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 45 minutes ago
0mins
Source: stocktwits
- Earnings Performance: Salesforce reported first-quarter revenue of $11.13 billion, exceeding Wall Street's expectation of $11.05 billion; however, the lack of sufficient growth momentum has led analysts to adopt a cautious outlook for the future.
- Price Target Adjustments: DA Davidson lowered its price target for Salesforce to $175, while BMO Capital cut its target from $225 to $215, reflecting market concerns regarding the company's future revenue growth.
- Investor Sentiment Shift: Although retail sentiment has improved from 'bullish' to 'extremely bullish', CRM's stock has declined over 31% year-to-date, indicating a divergence in market views on the company's prospects.
- Management Outlook: Roth Capital analyst maintained a 'Buy' rating with a $325 price target, believing that management's expectation of revenue growth acceleration in the second half of FY27 could serve as a catalyst, although the stock is likely to remain range-bound in the short term.
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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: 177.510
Low
223.00
Averages
326.40
High
405.00
Current: 177.510
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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- Price Target Adjustments: DA Davidson lowered its price target for Salesforce to $175, while BMO Capital cut its target from $225 to $215, reflecting market concerns regarding the company's future revenue growth.
- Investor Sentiment Shift: Although retail sentiment has improved from 'bullish' to 'extremely bullish', CRM's stock has declined over 31% year-to-date, indicating a divergence in market views on the company's prospects.
- Management Outlook: Roth Capital analyst maintained a 'Buy' rating with a $325 price target, believing that management's expectation of revenue growth acceleration in the second half of FY27 could serve as a catalyst, although the stock is likely to remain range-bound in the short term.
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- Revenue Growth: Total revenue for Q1 hit $11.13 billion, a 13% increase year-over-year, with subscription and support revenue at $10.69 billion, up 14%, reflecting robust customer demand and market share expansion.
- Robust Cash Flow: The company reported operating cash flow of $6.7 billion, up 3% year-over-year, and free cash flow of $6.6 billion, up 4%, providing a solid foundation for future investments and shareholder returns.
- Shareholder Returns: Salesforce returned $27.1 billion to shareholders through stock buybacks and paid $365 million in dividends, demonstrating a strong commitment to shareholder value alongside its impressive cash flow and profitability.
See More
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- Strong Agentforce Growth: Salesforce's Agentforce achieved $1.2 billion in annual recurring revenue (ARR) in Q1, growing 205% year-over-year, significantly exceeding the $900 million estimate, indicating robust market performance and potential for long-term growth.
- Increased Consumption Momentum: The quarter saw 1.6 billion Agentic Work Units (AWUs) consumed, up 111% quarter-over-quarter, showcasing a marked acceleration in demand for new products compared to previous quarters, reflecting strong customer interest.
- Guidance Adjustments: Management raised FY27 revenue guidance by $50 million to a range of $45.9 billion to $46.2 billion, although free cash flow growth expectations were lowered from 9-10% to 4-5%, indicating a cautious outlook on future financial performance.
- Positive Market Reaction: Salesforce shares rose 2% in early Thursday trading, reflecting investor optimism following the earnings report, while competitors like ServiceNow and Oracle also saw stock price increases, suggesting a broader positive sentiment in the industry.
See More
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- Earnings Performance: Salesforce reported first-quarter revenue of $11.13 billion, exceeding Wall Street's expectation of $11.05 billion; however, the lack of sufficient growth momentum has led analysts to adopt a cautious outlook for the future.
- Price Target Adjustments: DA Davidson lowered its price target for Salesforce to $175, while BMO Capital cut its target from $225 to $215, reflecting market concerns regarding the company's future revenue growth.
- Investor Sentiment Shift: Although retail sentiment has improved from 'bullish' to 'extremely bullish', CRM's stock has declined over 31% year-to-date, indicating a divergence in market views on the company's prospects.
- Management Outlook: Roth Capital analyst maintained a 'Buy' rating with a $325 price target, believing that management's expectation of revenue growth acceleration in the second half of FY27 could serve as a catalyst, although the stock is likely to remain range-bound in the short term.
See More
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- Strong Earnings Performance: Salesforce reported Q1 revenue of $11.13 billion, a 13% year-over-year increase, with adjusted earnings of $3.88 per share, significantly exceeding Wall Street's estimate of $3.13, indicating robust market performance.
- Cautious Outlook: Despite the strong Q1 results, Salesforce's revenue guidance for the current quarter is set between $11.27 billion and $11.35 billion, with adjusted earnings projected at $3.25 to $3.27 per share, which is below market expectations and may raise investor concerns.
- Healthy Demand for AI Tools: CEO Marc Benioff noted that Agentforce has surpassed a $1 billion annual revenue run-rate and is integrated across multiple Salesforce products, highlighting the company's ongoing investment in AI-driven tools and strong market demand.
- Significant Stock Volatility: Salesforce shares have fallen approximately 33% this year, while the iShares Expanded Tech-Software Sector ETF has only declined about 12%, reflecting market concerns regarding traditional software vendors amid the AI transformation.
See More
Key Wall Street Ratings Updates for Thursday
- Tesla Robotaxi Expansion: Morgan Stanley reiterates Tesla as equal weight, noting survey checks indicate increased hiring of 'AI Safety Operators' in northern metro areas, suggesting Tesla is gearing up for robotaxi operations expansion, which could enhance future revenues.
- National Health Properties Outlook: Citizens initiates coverage of National Health Properties as outperform, believing the REIT is enhancing organic growth by increasing exposure to Senior Housing Operating Properties, indicating confidence in the senior living market.
- Nvidia Data Center Potential: Bernstein reiterates Nvidia as outperform, highlighting the enormous and still early datacenter opportunity, which is expected to provide significant upside, reflecting optimism in tech stocks.
- Quanta Services Rating Upgrade: Oppenheimer upgrades Quanta Services from perform to outperform with an $800 price target, indicating strong growth potential in the coming years, particularly in adjusted EBITDA expectations.
See More
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- Strong Earnings Performance: Snowflake reported first-quarter results that exceeded expectations, leading to a more than 37% surge in shares during after-hours trading, indicating a potential best trading day ever and reflecting strong market confidence in its growth prospects.
- Significant Investment Commitment: The company announced a $6 billion investment in Amazon Web Services (AWS) to enhance its cloud computing capabilities and accelerate the development of AI-related products, thereby improving its competitive edge and customer service capabilities.
- Acquisition Strategy: Snowflake also revealed the acquisition of AI startup Natoma, further expanding its technological capabilities and signaling a strategic focus on AI, which is expected to support future product innovation and market expansion.
- Industry Dynamics Impact: Alongside Snowflake's strong performance, Salesforce also beat Wall Street's first-quarter estimates, although its full-year outlook fell slightly short, indicating signs of recovery in the tech sector that may attract more investor interest in related stocks.
See More
