Salesforce Stock Forecast
Salesforce (NYSE: CRM) is a software company based in San Francisco, California. It provides a range of services but is best known for its cloud-based customer relationship management (CRM) platform. In this article we will cover Salesforce stock forecast, predictions and whether or not it’s a current buy.
The company provides services around customer service, marketing automation, analytics and application development. Salesforce has been heralded as a strong investment over the years. Its share price has increased nearly 50 times since its 2004 IPO.
While its stock probably won’t increase in price another 50 times anytime soon, it can still be a good investment. However, shares of CRM have fallen a bit lately, and some investors might wonder what is going on and whether that should affect their long-term calculations. We’ll take a look at these concerns as well as what the outlook is for Salesforce in the months ahead.
Salesforce Quarterly Earnings
Salesforce’s earnings are a bit mixed for the most recent quarter, which ended October 2021. For this quarter, many of its year-over-year (YOY) figures are down. However, its revenue for this quarter was $6.86 billion, which was up 26%, and its highest revenue total of the past four quarters.
Its net income was $468 million; that is down 57% YOY, but compare that to Q1, when it posted revenue of $267 million. Likewise, its profit margin was 6.82%, which is down YOY but still an improvement over Q1. This is the trend we see in its earnings, a decline compared to Q2 and Q3, but still better than Q1 2021.
One positive for Salesforce stock forecast and particularly for investors is that it has consistently beat earnings per share (EPS) projections. In fact, it has consistently beaten projections by wide margins. In Q4 2021 an EPS of 0.92 was projected, and it posted an EPS of 1.27. Q3 was even better; an EPS of 0.93 was projected, but it posted an EPS of 1.48.
As far as revenue projections, it is beating those, but only by narrow margins. This past quarter, it beat its revenue projection by 0.88%; the quarter before, it beat it by 1.51%.
Why is Salesforce Stock Down?
It’s true; Salesforce stock has fallen. In November 2021, its shares were trading for over $300 per share. Now, just a few months later, shares of CRM are selling for less than $200 per share. Given that its price is down around one-third in just a few months, it’s natural to wonder what is going on.
However, Salesforce isn’t having any serious struggles that are causing its stock to tank. It’s more likely market conditions putting pressure on the stock itself. The market as a whole has been struggling, in part due to worries about inflation.
And now, there are new worries; namely, worries over the brewing tension between Russia and Ukraine. It may be tough to imagine how that would affect the use of a CRM platform based in San Francisco, but global unrest can affect the stock market, even when it seems like it shouldn’t.
Indeed, the stock market has struggled lately, and tech stocks, in particular, have lagged. All of this is to say that we don’t have much reason to be worried about Salesforce right now.
Salesforce Stock Outlook
Given that Salesforce’s drop is mostly due to market turmoil, its share price should rebound if market conditions improve. It is however worth noting that investor sentiment is weak around the stock.
And while investors may not have the highest level of confidence about Salesforce stock, analysts are decidedly more optimistic. The typical forecast puts the price around $325, or around 70% higher than CRM’s price today. In other words, its shares could soar past their previous high.
It should come as no surprise, then, the analysts consider this is a strong buy, and the majority recommend picking up some shares of Salesforce stock. But, again, there is a lot of uncertainty right now, and these recommendations likely take into account things like Russia’s invasion of Ukraine. Things are very uncertain there, so it is difficult to make stock recommendations that account for that.
Should You Buy Salesforce Stock?
If we simply look at the fundamentals regarding Salesforce stock forecast, then buying the stock seems to be a good idea right now. There are no major developments that spell trouble for the company, and its earnings continue to show that the company is doing relatively well.
One should also consider the fact that the rest of the market is not immune to the market conditions dragging Salesforce down right now. In fact, other tech stocks have fallen harder than Salesforce has since November.
You could certainly consider other sectors for now that aren’t affected as much, such as real estate. However, market conditions will eventually improve, and those who stay the course with stocks like Salesforce will likely be rewarded in the long run. For this reason, it’s a good idea to invest now it you like the company’s business model and believe it will continue its success well into the future.