Salesforce (CRM) has been holding its own remarkably well amid recent volatility.
The cloud giant is fresh off a remarkable guidance upgrade, and there are many reasons to believe that the firm can continue its march to higher levels.
There’s no question that CEO Marc Benioff has done an incredible job at the helm. With chatter swirling about a potential passing of the torch, will Salesforce still have its edge as it looks to make an even more significant mark in its corner of enterprise software?
Top executive Bret Taylor looks to be next in line to take the title of CEO of Salesforce. It’s clear that Benioff is grooming the perfect person to take the company to the next level. (See Insiders’ Hot Stocks on TipRanks)
With tremendous growth prospects and a knack for blowing away quarterly numbers, I remain bullish on Salesforce stock, regardless of any potential CEO change.
The company makes a strong case for why it should join the ranks of FAANG in the not-so-distant future.
Salesforce Powering Higher
The most remarkable part of Salesforce stock’s rally is the fact that it’s shrugged off broader weakness aimed at higher-multiple growth stocks.
Thanks to an incredible performance that paved the way for upbeat guidance, Salesforce is one of few firms that has been able to offset rate-induced pressures that would have otherwise sent shares tumbling alongside the rest of the high-growth tech scene.
Whether it’s through smart investments in late-stage unicorns, colossal acquisitions like Slack and Tableau Software, or organic growth, Salesforce has many growth levers it can pull to catch up to the leaders in the cloud enterprise software space.
Worthy Challenger in Enterprise
While it may seem far-fetched to think of Salesforce as a company that could one day dethrone Microsoft (MSFT), I don’t think it’s all that outrageous of a target, especially for a company as ambitious as Salesforce.
Salesforce’s momentum looks sustainable, and the company seems well-equipped to continue to do its part in facilitating the shift towards the home/office hybrid-work environment. It’s not just a pandemic tailwind.
Work-from-anywhere is likely to be a secular tailwind that could lift Salesforce stock to new heights. Is Slack acquisition, which was previously met with a plunging share price, may very well prove to be yet another value-creating move.
Like the FAANG companies, the Software-as-a-Service (SaaS) cloud pioneer seems to have the ability to sustain impressive double-digit growth.
As a company’s market cap grows, it’s growth rate is expected to slow accordingly. The FAANG companies have been outliers.
Salesforce looks like it could also be one such outlier, with its $283-billion market cap, and its impressive 26.6% in annualized growth averaged over the past three years.
With another magnificent quarterly beat and full-year guidance raise, Salesforce is a company that more than justifies its premium valuation.
At 12.1 times sales, CRM stock isn’t cheap, but it may very well be undervalued relative to its growth prospects.
Whether or not a big management shuffle is in the cards, investors shouldn’t expect the company’s market-beating ways to come to a halt.
Wall Street’s Take
According to TipRanks’ consensus analyst rating, CRM stock comes in as a Strong Buy. Out of 36 analyst ratings, there are 30 Buy recommendations, and six Hold recommendations.
The average Salesforce price target is $320.06. Analyst price targets range from a low of $242 per share, to a high of $375 per share.
Disclosure: Joey Frenette owned shares of Salesforce.com at the time of publication.
Disclaimer: The information contained in this article represents the views and opinion of the writer only, and not the views or opinion of Tipranks or its affiliates, and should be considered for informational purposes only. Tipranks makes no warranties about the completeness, accuracy or reliability of such information. Nothing in this article should be taken as a recommendation or solicitation to purchase or sell securities. Nothing in the article constitutes legal, professional, investment and/or financial advice and/or takes into account the specific needs and/or requirements of an individual, nor does any information in the article constitute a comprehensive or complete statement of the matters or subject discussed therein. Tipranks and its affiliates disclaim all liability or responsibility with respect to the content of the article, and any action taken upon the information in the article is at your own and sole risk. The link to this article does not constitute an endorsement or recommendation by Tipranks or its affiliates. Past performance is not indicative of future results, prices or performance.