Salesforce (CRM) currently trades at $171.22, reflecting a significant drop of 28% in recent months. However, Goldman Sachs remains optimistic, maintaining a Buy rating and setting a price target of $242. Analyst Gabriela Borges believes the company is poised for organic growth acceleration in the third quarter, driven by solid new business activity and an uptick in bookings.
Borges hosted Salesforce's investor relations team in London recently, gaining insights into the company’s strategy. According to her, management's recognition of challenges in Tableau, Commerce, and Marketing signals a reset rather than a long-term issue. This clarity allows for realistic expectations about the impact of these pressures over the next year or two.
Strategic Focus on AI Monetization
Salesforce is actively pursuing a multifaceted approach to AI monetization. This includes introducing consumption-based pricing, premium bundles, and agentic licenses. Early indicators show that customers utilizing Salesforce with AI agents are experiencing up to five times greater usage compared to those who aren’t. Slack, in particular, stands out as a beneficiary as new features based on large language models roll out.
As Salesforce gears up for its Agentforce event in September, more details about this strategy are anticipated. Notably, 24 analysts have already raised their earnings estimates for Salesforce, indicating growing confidence in the company's potential. With a gross profit margin of 77.6%, Salesforce is well-positioned to weather short-term challenges.
Acquisition of Fin Enhances AI Capabilities
In a significant move to bolster its AI-driven customer service, Salesforce plans to acquire Fin, formerly known as Intercom, for approximately $3.6 billion. Goldman Sachs views this acquisition as critical, positioning Fin as a leader in AI customer service technology. A key consideration for Salesforce will be successfully integrating Fin’s technology into its existing offerings, particularly the Agentforce framework, and adapting it for smaller customers after the deal concludes.
While Goldman Sachs is optimistic, other analysts portray a mixed outlook. KeyBanc downgraded Salesforce to Sector Weight, citing concerns about the timeline for Agentforce to contribute significantly to growth. Conversely, Guggenheim upgraded Salesforce to Buy from Neutral, emphasizing the current stock price as an attractive entry point for investors.
This material is informational and not financial advice.
