Salesforce.com Inc (NYSE:CRM) has ‘put the bears back in the cave’, according to analysts at Wedbush, which sees around 15% upside from the current price.
“With the bears expecting a softer print this quarter with macro fears swirling heading into CRM earnings, Salesforce came out of the gates swinging … performance with a top and bottom-line beat and raise quarter,” analyst Daniel Ives said in a note.
He added: “We believe this quarter was a continued testament to Salesforce’s resilience in this backdrop with crushing the margin and expense profile story, continuing new investments in the shift to AI, and providing an impressive raised guidance to the year with operating margin expected to be around 30.0%.”
California-based stockbroker Wedbush, today, repeated an ‘outperform’ rating with a newly upgraded target price of $255.
Salesforce after Wednesday’s close posted earnings of $2.12 per share on revenue of $8.6 billion, beating Street expectations of $1.90 per share and $8.53 billion.
Specifically, Salesforce delivered growth in all five of its product categories.
It also gave third-quarter guidance of $2.05 to $2.06 in adjusted earnings per share on $8.7 billion to $8.72 billion in revenue.
That topped analyst expectations of $1.83 per share and $8.66 billion in revenue.
For the full year, Salesforce raised its forecast to between $8.04 and $8.06 in adjusted earnings on revenue between $34.7 billion to $34.8 billion from $7.41 to $7.43 and $34.5 billion to $34.7 billion, respectively.
Its new guidance suggests 11% revenue growth if confirmed in the coming months.
Salesforce stock responded positively to the quarterly results, rising $7.09, or 3.3%, changing hands at $222.30.
At Wedbush, meanwhile, Daniel Ives commented: “Overall, we believe this was another great step in the right direction putting the bears back into the cave and hibernation mode as the next revolution of growth is on the doorstep for the software powerhouse for FY24/FY25.
“We maintain our Outperform rating while raising our price target from $240 to $255 reflecting a stronger growth trajectory looking ahead.”
Moreover, the analyst pointed out that Salesforce’s performance acts as a barometer on the health of IT and tech sectors (given that many of its larger customers are in these businesses) and suggests a bullishness to the underlying sector.
“Importantly, strong Salesforce numbers and outlook is a huge barometer for the overall IT spending environment with the Street coming away from this print/guide with a more bullish vibe than the last few quarters from the CRM stalwart,” he added.