Salesforce Inc. Stock Forecast: Analyst Predicts 25% Upside Potential
Salesforce Inc., a leading customer relationship management (CRM) software company, has seen a remarkable surge in its stock price over the past year, with an 85% increase. However, according to Morgan Stanley analyst Keith Weiss, there is still significant room for growth. In fact, Weiss has named Salesforce as his top pick and predicts a potential 25% upside for the stock.
Weiss attributes last year’s impressive performance to a substantial increase in Salesforce’s profitability profile, rather than multiple expansion. However, he believes that this year, investors may adopt a more optimistic view of the company’s long-term revenue growth potential and its position in the field of artificial intelligence (AI). This shift in sentiment could serve as a catalyst for driving Salesforce’s multiple back in line with its peers on a growth-adjusted basis.
One notable point highlighted by Weiss is that Salesforce shares currently trade at a discount of approximately 57% compared to shares of Microsoft Corp., Adobe Inc., and Intuit Inc. when considering growth-adjusted earnings. While these three companies also experienced significant stock rallies last year, their gains were largely driven by multiple expansion. This discrepancy suggests that Salesforce may be undervalued in relation to its growth prospects.
Furthermore, despite a nearly two-thirds increase in forward earnings estimates for Salesforce over the past year, the stock’s forward price-to-earnings multiple has only risen by low double digits during the same period. Weiss interprets this as strong support for his view that Salesforce offers the best risk-reward ratio among large-cap software companies. He maintains an outperform rating for the stock and sets a target price of $350.
In conclusion, while Salesforce has already enjoyed substantial gains in its stock price, Morgan Stanley analyst Keith Weiss believes that there is still significant upside potential. He points to the company’s improving fundamentals, long-term revenue growth prospects, and its position in the AI industry as factors that could drive the stock’s multiple back in line with its peers. With Salesforce currently trading at a discount compared to similar companies, Weiss sees a compelling risk-reward opportunity for investors. As such, he maintains his positive outlook on the stock and sets a target price of $350.
