Salesforce stock holds steady as UBS reiterates Neutral rating after mixed Q3

Investing.com - UBS has reiterated its Neutral rating and $260.00 price target on Salesforce.com (NYSE:CRM) following what the firm described as a "mixed" third-quarter earnings report. This target sits below InvestingPro’s Fair Value assessment, suggesting Salesforce may be currently undervalued despite trading at a P/E ratio of 35.

Salesforce reported total currency-adjusted revenue growth of 8% for the October quarter, meeting expectations despite what UBS noted was "some conservatism baked in" to the forecasts. This aligns closely with the company’s 8.4% revenue growth over the last twelve months, reaching $40.32 billion.

The company’s guidance for total revenue growth of 7-8% excluding Informatica was slightly below expectations, while Salesforce reaffirmed its fiscal year 2026 operating margin target of 34% despite absorbing the Informatica acquisition. Notably, Salesforce maintains impressive gross profit margins of 77.7%, reflecting strong operational efficiency.

UBS highlighted that Salesforce’s current remaining performance obligation (cRPO) grew 11% in the third quarter, which it considered solid, but the company’s guidance for 9% growth in the fourth quarter was merely in line with expectations. The company boasts a perfect Piotroski Score of 9, indicating excellent financial strength. InvestingPro data reveals over a dozen additional insights about Salesforce’s financial health.

The firm indicated it would remain "patient" on the stock until it could more clearly see a path back to 10%+ growth, noting that Salesforce management stated bookings are improving enough that subscription and support revenue growth should soon reach a low point before accelerating in the second half of fiscal year 2027. With analyst price targets ranging from $223 to $415, and an overall "Buy" consensus recommendation, professional opinions remain divided on Salesforce’s growth trajectory.

In other recent news, Salesforce.com reported third-quarter revenue that aligned with market expectations, while its current remaining performance obligation (cRPO) exceeded forecasts by approximately 2%. The company also provided fourth-quarter organic revenue and cRPO guidance that matched analysts’ expectations. TD Cowen maintained a Buy rating on Salesforce, highlighting the positive momentum of its AgentForce product. Piper Sandler echoed this sentiment with an Overweight rating, citing significant growth in Salesforce’s artificial intelligence offerings and Agentforce’s annual recurring revenue reaching $540 million.

RBC Capital reiterated its Sector Perform rating, noting Salesforce’s strong performance in billings and profitability metrics. DA Davidson adjusted its price target for Salesforce to $235, maintaining a Neutral rating due to lower-than-expected revenue but stronger bottom-line performance. Bernstein raised its price target to $223 while keeping an Underperform rating, acknowledging the company’s in-line quarter and guidance but expressing concerns about its position in the AI transformation. These developments reflect a mixed but generally positive outlook from analysts on Salesforce’s recent performance and future prospects.

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