Salesforce Leads Dow Jones Stocks After Earnings. Here's Why
Salesforce stock is soaring after the tech giant beat revenue expectations for its fiscal third quarter and gave a strong outlook for its fourth quarter.
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Salesforce (CRM) stock is the best Dow Jones stock in Wednesday's session after the software-as-a-service provider (SaaS) beat revenue expectations for its fiscal 2025 third quarter, raised the low end of its full-year revenue guidance and provided a strong revenue forecast for its fourth quarter.
In the three months ended October 31, Saleforce said its revenue increased 8.3% year over year to $9.4 billion. Its earnings per share (EPS) were up 14.2% from the year-ago period to $2.41.
"We delivered another quarter of exceptional financial performance across revenue, margin, cash flow, and cRPO [current remaining performance obligation]," said Salesforce CEO Marc Benioff in a statement.
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Benioff noted the company's artificial intelligence (AI) system, Agentforce, is leading a transformation at Salesforce. "The rise of autonomous AI agents is revolutionizing global labor, reshaping how industries operate and scale," he said. "With Agentforce, we're not just witnessing the future – we're leading it, unleashing a new era of digital labor for every business and every industry."
The company's "true turning point hinges on Agentforce execution and adoption," says Third Bridge analyst Charlie Miner. "If it proves to be an AI winner and delivers as a revenue driver, Salesforce's business could see a significant leap forward as early as mid-2025."
Salesforce's top- and bottom-line results were mixed compared with analysts' expectations. Wall Street was anticipating revenue of $9.3 billion and earnings of $2.44 per share, according to CNBC.
CRM also raised the low end of its full-year revenue guidance. It now expects to achieve revenue in the range of $37.8 billion to $38 billion in fiscal 2025, up from its previous forecast of $37.7 billion to $38 billion. The midpoint of its new range, $37.9 billion, came in just ahead of analysts' expectations for revenue of $37.86 billion.
For the fourth quarter, Salesforce said it expects to achieve revenue of $9.9 billion to $10.1 billion and earnings per share in the range of $2.57 to $2.62. Meanwhile, analysts are anticipating revenue of $10.05 billion and earnings of $2.65 per share.
Is Salesforce stock a buy, sell or hold?
Salesforce has been solid on the price charts in 2024, up 38% for the year to date vs the S&P 500's 27% gain. Unsurprisingly, Wall Street is bullish on the tech stock.
According to S&P Global Market Intelligence, the average analyst target price for CRM stock is $375.50, representing implied upside of nearly 4% to current levels. Additionally, the consensus recommendation is a Buy. Analysts may very well raise their price targets following the company's well-received earnings report.
Financial services firm Wedbush Securities is one of the more bullish outfits on the blue chip stock with an Outperform rating (equivalent to a Buy) and a fresh $425 price target, upwardly revised from its prior target of $375.
"We believe the AI Revolution is entering the software phase into 2025, and CRM and Benioff have now been let through the velvet ropes onto the dance floor for the AI Revolution Party at 10 pm, which goes until 4 am," says Wedbush analyst Daniel Ives.
The analyst adds that the price-target hike comes amid expectations the AI "the AI monetization phase will catalyze CRM's growth over the next 12 to 18 months."
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