Morgan Stanley raised its price target for Salesforce (CRM, Financials) to $404 from $393; the revised target implies a 52.2% upside. The firm maintained its Buy rating on the stock, even after a mixed market reaction to Salesforce's fiscal Q1 results. Analyst Keith Weiss acknowledged that while earnings met estimates, investor concerns focused on weaker-than-expected margins; the pace of Agentforce growth; and the absence of an upward revision in margin guidance.
Salesforce reported an operating margin of 32.3% in Q1; this came in slightly below the Street's 32.6% estimate. Weiss attributed the softness to seasonal trends, noting Q1 is typically the weakest quarter for margins. He also flagged management's decision not to raise guidance—despite currency tailwinds—as a cautious move; however, he said the long-term outlook remains intact.
The company is investing in growth areas such as Agentforce and Data Cloud; it is also expanding its sales team to drive revenue. Organizational efficiency efforts are underway, including staffing changes; Weiss views these steps as positive for future operating leverage. He believes Salesforce, currently trading at a mid-teens EV/FCF multiple, could be re-rated closer to the low-20x range if it maintains double-digit revenue growth and modest margin expansion; this would support continued free cash flow gains.
Salesforce holds a Moderate Buy consensus from Wall Street analysts, with 31 Buys, 9 Holds, and 3 Sells in the past three months. The average analyst price target stands at $349.93; that implies a 31.86% upside from current levels.
