Shares of Salesforce (CRM +2.71%) rallied on Tuesday, jumping as much as 4.4%. As of 3:37 p.m. ET, the stock was still up 3.9%.
The customer relationship management (CRM) specialist got a vote of confidence from a Wall Street analyst.
Image source: The Motley Fool.
An AI-driven future
It's no secret that software stocks have been punished in recent months over fears that autonomous AI agents could make them obsolete. As the world's largest software-as-a-service (SaaS) provider, Salesforce has been hit particularly hard.
Citi analyst Tyler Radke maintained a neutral rating on the stock while raising his price target to $204, up from $187, representing 7% upside from Monday's closing price. The analyst made the move ahead of Salesforce's fiscal 2027 second-quarter financial report, which is scheduled for Aug. 26. Radke notes that conditions improved "modestly" compared to Q1. While the landscape remains mixed, the higher price target reflects the better-than-expected channel checks and to match consensus estimates.
For the second quarter, Salesforce's forecast calls for revenue of $11.31 billion, representing about 10.5% growth, and adjusted earnings per share (EPS) of $3.26, both at the midpoint of its guidance. Wall Street's consensus estimates currently call for revenue of $11.32 billion and adjusted EPS of $3.27, in line with management's guidance.
NYSE: CRM
Key Data Points
Salesforce has shifted to adapt its business to an AI-powered future, integrating agentic AI tools into its offerings. The company's Agentforce platform helps customers build and deploy autonomous agents in a familiar environment.
It's worth remembering that in Q1, Salesforce delivered record first-quarter revenue that grew 13% year over year to $11.1 billion, driving adjusted EPS up 50% to $3.88. Moreover, the company's current remaining performance obligation (RPO) jumped 14% to $33.6 billion, building a solid foundation for the remainder of the year.
To be clear, challenges remain, but Salesforce has a long track record of adapting to changes in the landscape. And at less than 23 times earnings, the stock is a steal.
