Salesforce shares PT lifted to $335 by BMO Capital, citing ‘robust FCF growth’

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On Thursday, BMO Capital Markets adjusted its outlook on Salesforce.com (NYSE:CRM), raising the company’s price target to $335 from $325 while maintaining an Outperform rating. The decision comes after Salesforce reported a strong January quarter, surpassing expectations with a 2-point beat on Current Remaining Performance Obligations (CRPO).

Salesforce’s guidance for fiscal year 2025 revenue was slightly below market predictions, impacted by weaker professional services performance. Despite this, the firm’s guidance for margins and free cash flow (FCF) was noted as impressive. Adding to the positive outlook, Salesforce announced the initiation of its first dividend, a move BMO Capital views as appropriate considering the company’s current revenue run-rate.

The analyst expressed some reservations about the immediate impact of Salesforce’s Data Cloud and generative AI initiatives. However, the overall valuation of Salesforce was deemed compelling, particularly in light of the robust growth in free cash flow. The combination of these factors prompted BMO Capital to increase its price target for Salesforce shares while reaffirming its positive rating on the stock.

The initiation of a dividend by Salesforce marks a significant milestone, reflecting a level of financial maturity and stability that is typically well-received by investors. This strategic decision may also signal the company’s confidence in its ongoing ability to generate strong cash flows in the future.

Salesforce’s financial performance, as well as its strategic initiatives, will continue to be watched closely by investors as the company navigates the evolving tech landscape. The updated price target by BMO Capital suggests a positive outlook for the stock’s performance moving forward.

InvestingPro Insights

Following BMO Capital Markets’ upgrade of Salesforce.com’s price target, InvestingPro data reinforces the company’s strong market position. Salesforce’s market capitalization stands at a robust $290.18 billion, reflecting its significant presence in the industry. The company’s revenue for the last twelve months as of Q4 2024 reached $34.86 billion, with a notable growth rate of 11.18%. This revenue growth underscores Salesforce’s ability to expand its business and market share.

InvestingPro Tips suggest that Salesforce is expected to see net income growth this year, which is a positive signal for potential investors. The company is also trading at a low P/E ratio relative to near-term earnings growth, indicating that the stock may be undervalued given its future earnings prospects. For those interested in further insights, there are 16 additional InvestingPro Tips available, including Salesforce’s trading patterns and valuation multiples, which can be found at: https://www.investing.com/pro/CRM.

Moreover, Salesforce’s gross profit margin remains impressive at 75.5%, demonstrating the company’s efficiency and strong pricing power. The company’s stock has also experienced a high return over the last year, with a 83.22% increase in price total return, and is trading near its 52-week high at 98.66% of the peak price.

For investors looking to delve deeper into Salesforce’s financials and market performance, InvestingPro offers a comprehensive analysis. Utilize the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, providing access to a wealth of resources for making informed investment decisions.

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