Key Arguments Supporting the Idea
Investment Thesis
Market expectations ahead of the report have been revised downward, creating greater opportunities for a positive surprise. According to Salesforce management, more pronounced monetization of the company’s AI products will begin in the second half of 2025. In recent months, several important developments have occurred that should drive business growth despite conservative market forecasts.
Ahead of the report, funds have been increasing their positions in CRM shares. In particular, activist investor Starboard Value increased its stake in the company by 50%. Starboard Value was among the activist funds that entered the company’s capital in 2022, after which Salesforce began its transformation with a focus on “profitable growth.” Over the past 1–3 months, a large share of investors have been adding to their CRM positions.
Attractive Valuation Levels
The company is trading at a significant discount on key forward multiples — both relative to its historical averages and compared to other enterprise productivity software companies.
This valuation gap has been steadily widening in recent quarters, against the backdrop of weak Salesforce earnings reports. However, it is expected to begin narrowing soon, supported by the monetization of the company’s new products.
Target Price and Recommendation
Our 2-month target price for CRM is $270, with a “Buy” recommendation. We recommend setting a stop-loss at $230.
- Strong potential for a positive earnings surprise on September 3, against the backdrop of low market expectations and several growth catalysts.
- Funds are increasing their positions in CRM shares, including activist investor Starboard Value.
- Attractive valuation levels based on multiples.
Investment Thesis
Market expectations ahead of the report have been revised downward, creating greater opportunities for a positive surprise. According to Salesforce management, more pronounced monetization of the company’s AI products will begin in the second half of 2025. In recent months, several important developments have occurred that should drive business growth despite conservative market forecasts.
- First, in May, Salesforce released Agentforce 3, featuring faster and more accurate responses, expanded functionality, and a more flexible pricing model.
- Second, starting in August, Salesforce raised prices for a number of its products and introduced new paid add-ons. This is expected to trigger a structural shift of clients toward more expensive pricing plans.
Ahead of the report, funds have been increasing their positions in CRM shares. In particular, activist investor Starboard Value increased its stake in the company by 50%. Starboard Value was among the activist funds that entered the company’s capital in 2022, after which Salesforce began its transformation with a focus on “profitable growth.” Over the past 1–3 months, a large share of investors have been adding to their CRM positions.
Attractive Valuation Levels
The company is trading at a significant discount on key forward multiples — both relative to its historical averages and compared to other enterprise productivity software companies.
- Relative to its 5-year average levels on PEG, P/E NTM, and P/FCF NTM, CRM shares trade at a 40–50% discount.
- Compared with one of its main competitors, ServiceNow (NOW), CRM trades at a 40–60% discount on these same multiples.
This valuation gap has been steadily widening in recent quarters, against the backdrop of weak Salesforce earnings reports. However, it is expected to begin narrowing soon, supported by the monetization of the company’s new products.
Target Price and Recommendation
Our 2-month target price for CRM is $270, with a “Buy” recommendation. We recommend setting a stop-loss at $230.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.