Salesforce, Inc. (NYSE: $CRM)

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Salesforce, Inc. (NYSE: CRM) is a cloud-based software company. It builds software to help businesses manage their sales operations, customer data, and marketing campaigns. The company aims to improve the customer experience for businesses to help them grow their sales. CRM stock recently rose over 9% after a better-than-expected earnings report.

Salesforce Earnings Report

The company released its fiscal Q3 2024 earnings report on November 29, 2023. It reported a revenue of $8.72 billion, a year-over-year rise of 11%, a surprise of 0.04%. EPS was also better than expected by 2.59% at $2.11 against a projected $2.06.

Subscription and support, its most significant unit, saw revenue rise 13% year-over-year to $8.14 billion. Meanwhile, the professional services and other revenues segment dropped 4% year-over-year to $0.58 billion.

The company reported a guidance of $9.18-$9.23 billion in its outlook section, representing a 10% year-over-year rise. For FY24, the company’s revenue guidance is $34.75-$34.80 billion, an 11% year-over-year rise. Salesforce also adjusted its Q4 EPS guidance to $2.25-$2.26, higher than the analysts’ estimate of $2.17.

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CRM Stock Performance

With a reported revenue increase of 11%, CRM stock was up 9.36% at the close of trading on November 30, 2023. However, that is a slightly worse performance than previous years when Salesforce has historically grown annual revenue by 20% on average.

A major reason for the slowed growth is reduced company spending due to macroeconomic pressure, such as high interest rates. Despite this, Salesforce stock is up 86.90% year-to-date. A better performance than the Nasdaq Composite, up 36.96% year-to-date.

The company has performed well amidst challenging economic times via aggressive cost-cutting measures. At the start of 2023, the company cut 10% of jobs and cut back on office space. The company recently moved to reduce sales-related costs with a planned offering of its most popular tools, such as self-service purchases via Amazon Web Services Marketplace.

As of the close of trading on November 30, 2023, Salesforce stock was valued at $251.90 per share. At this price, the stock is trading at around 20% of its record high of $299.69, which it achieved in October 2021.

Salesforce Stock Forecast

Analysts give CRM stock a moderate buy rating. The highest price target is $345.00, while the lowest is $159. Its average price target is $272.48, an upside of 8.17% on the current price of $251.90.

Should You Buy Salesforce Stock

Salesforce has traditionally managed to grow revenue by an average of 20% in the past few years. In 2023, macroeconomic pressure has reduced that growth to 10% for FY24. However, CRM stock has performed exceptionally well, rising over 86% year-to-date.

Additionally, the company has been integrating AI into its Customer Relationship Management (CRM) platform. It allows users to get more value from the data in their CRM systems with the help of generative AI. Combined with its various cost-cutting measures, Salesforce will likely continue to reduce its cost of revenue in 2024 and beyond. Based on this analysis, the analysts’ rating of a moderate buy for the stock is accurate.

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