Piper Sandler Upgrades Salesforce.com (NYSE:CRM) Rating to Overweight, Sets New Price Target of $325
In a recent analysis, Piper Sandler has expressed a bullish outlook on Salesforce.com, Inc. (NYSE:CRM), upgrading the stock's rating from Neutral to Overweight and setting a new price target of $325, up from the previous $268. This decision is based on the firm's anticipation of a significant increase in Salesforce's free cash flow per share.
According to Piper Sandler's projections, Salesforce's free cash flow per share could potentially double to over $20 by fiscal year 2029 (calendar year 2028) from $9.65 in fiscal year 2024 (calendar year 2023), even with modest top-line growth of 8-9%. The firm also highlights that Salesforce's valuation multiples are the lowest among its large-cap software peers.
Recent discussions with Salesforce's leadership, partners, and customers have further boosted Piper Sandler's confidence in the company. The introduction of Agentforce, powered by the Atlas Reasoning Engine, and the Data Cloud are expected to drive demand and potentially lead to a recovery by calendar year 2026 (fiscal year 2027).
Piper Sandler has adjusted its estimates for Salesforce, applying a target enterprise value to free cash flow multiple of 23 times and lowering the discount rate used in its valuation. This has contributed to the increased price target and optimistic outlook for the company's financial performance in the coming years.
In conclusion, Piper Sandler's positive assessment of Salesforce's investment potential is supported by the company's strong financial health and recent developments. Investors may consider this upgraded rating and price target as indicators of potential growth in Salesforce's stock value in the future.
Analysis:
- Piper Sandler upgrades Salesforce's rating to Overweight with a new price target of $325.
- Projections show potential doubling of free cash flow per share by fiscal year 2029.
- Salesforce's valuation multiples are the lowest among its peers.
- Recent developments like Agentforce and Data Cloud are expected to drive demand.
- Positive second-quarter earnings report and recent acquisitions contribute to the bullish outlook.
- Analyst firms maintain ratings, with some adjusting price targets based on growth projections.
- InvestingPro Insights highlight Salesforce's financial health and potential for stock price appreciation.
- The stock is trading at a low P/E ratio relative to earnings growth, indicating possible undervaluation.
- Additional insights available on InvestingPro platform for informed investment decisions.