Here’s what Wall Street experts are saying about Salesforce ahead of earnings

Salesforce (CRM) is scheduled to report results of its second fiscal quarter after the market close on Wednesday, August 30, with a conference call scheduled for 5:00 pm ET. What to watch for:

GUIDANCE: Along with its first quarter earnings report, Salesforce reaffirmed 2024 revenue guidance of $34.5B-$34.7B. Consensus, which was $34.65B at the time, has since dropped to $32B. Salesforce also raised its 2024 adjusted earnings per share view to $7.41-$7.43 from $7.12-$7.14. Consensus for EPS, which was $7.14 at the time, has slid to $6.88. The company also provided second quarter adjusted EPS guidance of $1.89-$1.90 on revenue of $8.51B-$8.53B. Consensus for earnings, which was at $1.70 at the time, has risen to $1.75, and consensus for revenue, which was at $8.49B, has dropped to $7.87B.

ACTIVIST INVESTORS: In January, the Wall Street Journal reported activist investor Elliott Management made a multi-billion-dollar investment in Salesforce, which followed the acquisition of an undisclosed stake by Starboard Value in October. Additionally in January, CNBC reported Jeff Ubben’s Inclusive Capital had taken stake in the company and in February, the Wall Street Journal reported that Third Point has built a stake in Salesforce.

In a July interview with CNBC, Starboard CEO and CIO Jeff Smith noted the firm and Salesforce have developed a “great relationship”, but that there is “still more to be done”. He added the company still has 1000 points margin opportunity and said Starboard is “pretty excited” about the company’s AI opportunities. He said he thinks Salesforce can get above $300 per share.

PARTNERSHIPS, FEATURES: In May, Salesforce announced Esquire Financial Holdings (ESQ) had expanded its use of the company’s technology and Slack announced the introduction of its Slack GPT generative artificial intelligence platform. In June, the company announced J.P. Morgan’s (JPM) launch of its Payments Partner Network powered by Commerce Cloud as well as Marketing GPT and Commerce GPT offerings. Additionally in June, Salesforce announced an expanded partnership agreement with Google Cloud (GOOGL) as well as the company’s AI Cloud suite, which included a new Einstein GPT Trust Layer. The company also announced its Sales GPT and Service GPT capabilities as well as a collaboration with Deloitte Digital on AI in June. Salesforce also announced a plan to invest $4B in its UK businesses over five years in June and in July, stated it was increasing list prices an average of 9% across Sales Cloud, Service Cloud, Marketing Cloud, Industries and Tableau.

ANALYST VIEWS: On Tuesday, JPMorgan removed Salesforce from the firm’s Analyst Focus List but kept an Overweight rating on the name with a $230 price target. The shares have risen 60% year-to-date, well ahead of the S&P 500 and Nasdaq, the analyst said. The firm added some of the catalysts it anticipated have played out during this period of outperformance, including the “massive” margin expansion framework and buildup of generative artificial intelligence excitement.

Meanwhile on Monday, Citi analyst Tyler Radke lowered the firm’s price target on Salesforce to $220 from $230 and kept a Neutral rating on the shares. The analyst does not see risk to the company’s guidance but expects upside to be “constrained.” The firm said Salesforce’s sales growth trends remain pressured amid renewal risk heading into Q4 and 2024 and as expectations on margin expansion “have largely played out.”