Following weaker-than-expected guidance from Salesforce (NYSE:CRM), Wall Street analysts collectively said that the prospect and hope of artificial intelligence has not helped the company turn a corner. Yet.
Shares fell 7% in premarket trading on Thursday.
“Lack of a FY raise on a decent 2Q suggests less upside [the rest-of-year than previously expected],” Wells Fargo analyst Michael Turrin wrote in a note to clients. “Remain balanced until greater signs of a catalyst emerge, w/ Agentforce uptake proving slower than anticipated (ARR disclosure not given).” Turrin has an Equal-Weight rating and $265 price target on Salesforce.
Similar, Evercore ISI analyst Kirk Materne said investors are playing a “waiting game” with Salesforce, as they look for subscription revenue to stabilize.
“While we did not see this quarter as the ‘unlock’ for the bull case, at these levels, we believe stabilization in 2H c/c subs revenue is ‘good enough’ to start shifting sentiment in a more positive direction,” Materne wrote in a note to investors. “That said, seeing is believing and while we believe the risk/reward continues to skew to the upside if thinking out 3 to 4 months, shares are likely in a holding pattern until Dreamforce in mid-Oct.” Materne has an Outperform rating and $360 price target on Salesforce.
Morgan Stanley analyst Keith Weiss also acknowledged that the company is “positioning for the turn,” but was a bit more optimistic in that he believes the pieces are coming together soon.
“… Within the details of the quarter, one can see the pieces coming together for a more positive trajectory in growth and a solid catalyst path ahead for the shares,” Weiss wrote.
Weiss added that while the revenue guidance was “relatively unchanged” (with foreign exchange providing a boost to the low-end), the commentary from management was more encouraging. Chief Revenue Officer Miguel Milano made several comments about the pipeline, including big deals, which are approaching 20% growth.
“Bottom line, this strong positioning to benefit from the expanded capabilities of GenAI remains unappreciated in a marketplace thinking “SaaS is dead” and within a stock trading at 16X CY26 [free cash flow],” Weiss added. “As such, we see a positive risk/reward in CRM and remain firmly [Overweight].” Weiss also has a $405 price target on Salesforce.