Almost all of Wall Street’s big hitters have dialed in their latest quarterly reports by now but not all of them. Once trading activity comes to a stop on Wednesday (Aug 30), Salesforce (NYSE:CRM) will release its second quarter of fiscal 2024 report.
According to inquiries made by Deutsche Bank’s Brad Zelnick, the software giant will meet Street expectations… but only just. “Our F2Q field checks leave us expecting an in-line quarter against what is still a challenging backdrop,” the 5-star analyst said. “Salesforce’s field organization is no doubt returning to the culture of execution for which the company had always been known, but large deals remain difficult to come by in this environment.”
With that being said, it appears that throughout June and July, momentum has “accelerated” although some of that might be due to the usual seasonal trends. Still, Zelnick notes that the pipelines for F2H24 “continue to expand.” Zelnick also talks of hearing a revival of strong growth for MuleSoft while he notes there’s considerable potential in the untapped TAM (total addressable market) for Data Cloud as its pipeline gets built out.
On the other hand, with large-scale projects on the whole being postponed, Zelnick mentions a regional sales lead “claiming the worst pipeline over the last 10 years.” “While he still expressed confidence in meeting targets, there is little room for error,” Zelnick notes.
Another has talked of a “flat” F2Q, which is better than the negative trends seen in F1Q. At the onset of 2023, they were looking for 20-25% growth for the year but given they would need to show growth of 20% in F3Q and F4Q, even 10% now appears a “stretch goal.”
While all of that doesn’t sound like much of a confidence boost ahead of the print, then you might be surprised to hear Zelnick’s summary. “With its strong pricing power, unparalleled access to enormous trusted data, an eventual rotation back to front office spending, as well as management’s laser-focus on margins and cash flow growth, we believe Salesforce shares are poised to outperform,” he wrapped up.
Accordingly, Zelnick has a Buy rating for CRM shares, backed by a $245 price target. Should the figure be met, a year from now, investors can expect to pocket returns of 13%.
Most analysts agree with Zelnick although not all are convinced. The stock claims a Moderate Buy consensus rating, based on 22 Buys, 10 Holds and 1 Sell. At $236.44, the average target is slightly lower than Zelnick’s objective and makes room for one-year returns of ~12%. (See Salesforce stock forecast)
To find good ideas for stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a newly launched tool that unites all of TipRanks’ equity insights.
Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
