Software giant Salesforce (CRM) is facing challenges as growth slows and competition heats up, even as it invests heavily in artificial intelligence (AI). Recently, two five-star analysts expressed mixed opinions on the stock. DA Davidson analyst Gil Luria upgraded the stock to Hold, while Barclays analyst Raimo Lenschow kept a Buy rating, expecting short-term gains.
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DA Davidson Upgrades, But With Caution
Luria upgraded Salesforce stock’s rating to Hold from Sell, keeping a price target of $225. The move comes after the stock underperformed the iShares Expanded Tech-Software Sector ETF (IGV) by 48 percentage points year-to-date.
Luria cited falling investor sentiment as justified, pointing to slowing organic growth and mounting pressure from rivals. However, after hedge fund Starboard Value boosted its stake in Salesforce by 47%, the analyst believes more activist pressure could help the company get back on track.
Barclays Sees Short-Term Upside
Lenschow offered a more optimistic take. He believes U.S. software stocks, including Salesforce, could see a short-term bounce this earnings season, even as concerns over generative AI linger.
Lenschow noted strong customer interest in Salesforce’s AI offerings and expects the company to post a modest beat this quarter. He sees October’s Dreamforce event, where CRM is likely to unveil the next version of Agentforce, as a key catalyst.
Overall, the analyst maintained a Buy rating but trimmed the price target to $316 from $347.
What’s Next for Salesforce?
Looking ahead, Salesforce’s upcoming earnings, due for release on September 3, and its Dreamforce event might aid in winning back investors’ confidence. If the company is able to prove that AI is helping without hurting its main business, momentum could return.
Currently, Wall Street analysts expect CRM to report earnings of $2.78 in fiscal Q2, compared to $2.56 in the prior-year quarter. Also, the company’s revenue for Q2 is expected to rise by about 9% year-over-year to $10.14 billion.
Is CRM a Buy, Sell, or Hold?
Turning to Wall Street, CRM stock has a Moderate Buy consensus rating based on 33 Buys, 10 Holds, and one Sell assigned in the last three months. At $347.51, the average Salesforce stock price target implies a 42.44% upside potential.
