Analyst Bradley Sills from Bank of America Securities maintained a Buy rating on Salesforce (CRM – Research Report) and keeping the price target at $400.00.
Bradley Sills has given his Buy rating due to a combination of factors that highlight Salesforce’s potential for growth and financial performance. One of the key reasons is the anticipated acceleration in revenue growth, which is projected to increase to 12%-13% from the current normalized rate of 10%. This growth is supported by the traction of Salesforce’s Data Cloud, which has shown significant annual recurring revenue growth, serving as a leading indicator for further expansion.
Additionally, Sills points to the potential for margin expansion and free cash flow growth driven by ongoing productivity efforts within the organization. Salesforce is expected to achieve steady margin expansion through sales and marketing leverage, with a forecasted 15% five-year compound annual growth rate in free cash flow. Despite high sales and marketing expenses, there is room for improvement through strategies such as optimizing account executive ratios, leveraging partnerships, and enhancing product packaging. These factors contribute to a compelling potential share price appreciation, supporting the Buy rating with a price objective of $400.
In another report released yesterday, Scotiabank also maintained a Buy rating on the stock with a $345.00 price target.
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