Key Takeaways From Salesforce’s Investor Meeting

Salesforce (NYSE:CRM) shares rose nearly 3% intra-day today after the company announced optimistic guidance and surpassed expectations with its fourth-quarter earnings, driven by increased spending in the enterprise sector. This positive momentum has led the cloud software company to declare its inaugural quarterly dividend and enhance its stock repurchase program.

In Q4, Salesforce saw its adjusted earnings rise to $2.29 per diluted share from $1.68 in the previous year, with revenue climbing to $9.29 billion from $8.38 billion. These figures exceeded analyst predictions of $2.27 earnings per share on $9.22 billion in revenue.

For the upcoming Q1, Salesforce anticipates adjusted earnings per share between $2.37 and $2.39, with revenue projections ranging from $9.12 billion to $9.17 billion. These forecasts outpace Wall Street expectations of $2.2 earnings per share on $9.14 billion in revenue.

For the entire fiscal year, the company projects adjusted earnings per share to be between $9.68 and $9.76, with revenue estimated to be in the range of $37.7 billion to $38.0 billion.

Salesforce initiated its first-ever quarterly dividend of $0.40 per share and has expanded its share buyback program by an additional $10 billion.

Analysts at Morgan Stanley upgraded Salesforce (NYSE:CRM) shares from Equal-Weight to Overweight and raised the price target by $60 to $350 per share.

The bank cited low investor expectations versus potential revenue growth drivers as key reasons for this upgrade. The analysts pointed out that these drivers include price increases, product bundling, and adoption of the Data Cloud, all contributing to an attractive risk/reward profile for Salesforce.

They also noted Salesforce's significant outperformance in 2023 compared to its large-cap software peers, attributing this to a substantial improvement in the company's profitability outlook. Specifically, the analysts highlighted an over 800 basis points year-over-year expansion in operating margin.

While much of the recent margin growth is believed to be behind, Morgan Stanley identified several factors that could lead to potential top-line growth, exceeding the conservative expectations of investors. These factors are the effective implementation of recent price hikes, new bundled solutions enhancing the sales process, and the Data Cloud service, which helps customers leverage their data for Generative AI applications.

Citi analysts updated their price target for Salesforce (NYSE:CRM), increasing it from $229 to $247 per share, while maintaining a Neutral rating on the stock.

The analysts communicated to investors that the approach to Salesforce's Q3 earnings is marked by a balanced perspective on the company's prospects for growth and margins. They referenced discussions with partners that echoed similar sentiments as previous quarters, highlighting challenges in renewals and new business acquisitions. Notably, one partner observed minimal or no new net product adoption, and there was a general consensus about pushback from customers against Salesforce's assertive pricing during renewals.

The decision to keep a Neutral rating on Salesforce's stock is driven by the belief that the company's margin expansion has largely reached its peak and that growth might slow down, potentially settling into the high single digits by fiscal 2025.

Salesforce.com (NYSE:CRM) shares gained more than 4% intra-day today after the company announced a 9% price increase across various products.

Evercore ISI reiterated an Outperform rating and a price target of $240.00 on the company, highlighting that this is the first price hike in seven years for Salesforce, during which the company has made significant investments of over $20 billion in research and development and introduced 22 software releases with numerous features. This includes recent additions such as the AI Cloud and 'GPT' capabilities across its clouds.

The analysts believe that while some customers may express dissatisfaction with the price increase, considering the seven-year interval, a 9% increase seems reasonable. The analysts expect these price actions to provide positive momentum for Salesforce in the second half of 2024 and the first half of 2025.

Salesforce.com (NYSE:CRM) shares gained more than 4% intra-day today after the company announced a 9% price increase across various products.

Evercore ISI reiterated an Outperform rating and a price target of $240.00 on the company, highlighting that this is the first price hike in seven years for Salesforce, during which the company has made significant investments of over $20 billion in research and development and introduced 22 software releases with numerous features. This includes recent additions such as the AI Cloud and 'GPT' capabilities across its clouds.

The analysts believe that while some customers may express dissatisfaction with the price increase, considering the seven-year interval, a 9% increase seems reasonable. The analysts expect these price actions to provide positive momentum for Salesforce in the second half of 2024 and the first half of 2025.

Deutsche Bank analysts provided their outlook on Salesforce, Inc. (NYSE:CRM) ahead of tomorrow’s Q1 earnings announcement.

The analysts expect Q1 results to be far less eventful than Salesforce's strong Q4 which included very respectable margin targets and other shareholder-friendly commitments. Since then, the stock is up 29%. With several activist investors having now largely come and gone, the analysts believe the fundamental debate focuses on the next chapters of this story, and in particular the rate at which the company can grow from here.

As for the quarter, the analysts’ recent partner checks were unsurprisingly mixed given Q1 seasonality, a tough backdrop, and significant changes at Salesforce, but they think there's enough there for results to be fine.