Stock Analysis & Ideas

Salesforce (NYSE:CRM) Gains After Solid Forecast

Story Highlights

Investors cheered Salesforce’s medium-term sales and margin outlook. Salesforce projects double-digit revenue growth through 2026.

Salesforce (NYSE:CRM) provided an upbeat medium-term revenue and margin outlook, following which its stock gained 1.3% in the after-hours of trade. The cloud-based CRM (customer relationship management) tech provider expects its top line to reach $50 billion by 2026, implying a CAGR of 17%. Further, it expects a 270 basis points improvement in its two-year adjusted operating margin. 

CRM’s sales will benefit from the ongoing digital shift. Further, expansion of its TAM (total addressable market) should support growth. The company expects its TAM to grow at a CAGR of 13% and reach $290 billion by 2026. Moreover, geographic expansion, customers adopting its multiple offerings, and incremental revenues from existing customers are positives. 

Is CRM a Buy, Sell, or Hold?

CRM stock forecast on TipRanks shows that Wall Street is bullish about its prospects. Salesforce stock has a Strong Buy consensus rating based on 29 Buys and four Holds. Moreover, these analysts’ average price target of $225.19 implies 52.5% upside potential over the next 12 months.

Along with analysts, hedge funds are optimistic about CRM stock. Hedge funds acquired 3.9M Salesforce shares in the last three months. Further, CRM sports an Outperform Smart Score of nine out of 10 on TipRanks, implying it is more likely to deliver better returns than the broader market. 

Bottom Line 

Salesforce’s solid outlook, ongoing digital transformation, and growing TAM are positive catalysts for the stock. However, macro headwinds impacting enterprise spending could pose challenges in the short term.

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