Salesforce gains as Piper Sandler upgrades on risk-reward, AI opportunity

Salesforce (NYSE:CRM) was in focus on Tuesday as Piper Sandler upgraded the cloud software company on a positive risk-reward and its opportunity in artificial intelligence.

Shares rose 2% in premarket trading.

“We are upgrading CRM to Overweight based on a favorable risk-reward given the potential for [free cash flow] per share to double to $20+ by F2029 (CY28) from $9.65 in F2024 (CY23), even if top-line growth remains at subdued levels of 8-9%,” analyst Brent Bracelin wrote in an investor note. Bracelin also upped his price target on Salesforce to $325 from $268.

Salesforce held its annual Dreamforce event last week and discussions with the company’s leadership team, partners and customers provided confidence that new pricing and packaging could boost multi-cloud adoption, while the promise of Agentforce could stabilize demand, Bracelin added.

“Salesforce has historically provided new platform updates three times per year,” Bracelin wrote. “The pace of AI has changed this cadence, most notably within Data Cloud, where new platform updates are released monthly. Agentforce is a byproduct of these innovations with formal [general availability] coming next month, and Gucci and Wiley in early production.”

Salesforce also has the additional opportunity to boost margins and buybacks, which could result in low double-digit free cash flow growth per share over the next three to five years.

“CRM shares could benefit from both earnings and multiple expansion, in our view,” Bracelin added.