Having hit a fresh high back in March, investors in Salesforce Inc (NYSE: CRM) would have been forgiven for thinking the uptrend was set to continue. The ever-popular enterprise software platform had rallied 150% to get there. But whereas the rest of the market continued to rally into, and through, the summer, Salesforce shares had shed about 35% of their value by the start of May.
And while the tech titan has managed to trend upwards consistently since then, it’s still a ways off March’s high. However, as we head into the last couple of weeks of the year, there are reasons to think it might not be too long before Salesforce is back at those levels, if not beyond them.
Chief among them is the host of heavyweight analysts who consider the stock to be a roaring buy and who have been pushing some seriously bullish price targets. Let’s jump in and take a closer look.
Bullish Analyst Ratings
Starting with MarketBeat’s Analyst Forecast tool, we can see that out of 38 analyst ratings on Salesforce shares, 29 have it rated Buy. Looking at some of the more recent voices in the bulls camp, there’s the Piper Sandler team who upgraded their rating on the stock at the end of last month. The move was primarily based on what they called a favorable risk-reward profile, and the likelihood that Salesforce’s free cash flow per share is set to double by 2029.
They also expect Salesforce margins to improve and its stock repurchase plans to increase. For those of us on the sidelines, this is bullish for the stock as higher margins boost profitability, while buybacks reduce the share count, increasing earnings per share. They also tell investors and the market that a company’s management feels strongly enough that its stock is trading below its fair value to buy its own shares.
AI Tailwind
The Wedbush team is similarly bullish on Salesforce’s prospects but for slightly different reasons. In their note to clients at the end of September they highlighted the company’s AI strategy as a tailwind that could help drive a $4 billion increase to revenue by 2025. While the AI revolution has been underway now for some time, the Wedbush team still sees Salesforce as one of the best positioned companies to benefit from it in the coming years.
It was a similar stance and reasoning from Northland, who, at the start of October, upped their rating on Salesforce to Outperform while giving the stock a street-high price target of $400. Considering the stock closed below $290 on Tuesday night, that’s pointing to a targeted upside of nearly 40%. They also see the likelihood of an AI-inspired multi-year tailwind based on positive customer feedback to the company’s new generative AI tool, AgentForce.
Reasons To Be Excited
It’s clear from all these updates that there’s no shortage of bullishness on Salesforce right now, and there’s every reason to think the 35% rally that’s been underway since the start of June should continue into the end of the year. Considering that Salesforce is currently just a 10% move away from its previous all-time high, there’s every reason to be bullish right now.
The Fed has started to cut rates, which will primarily benefit tech stocks like them; the broader market is setting high after high right now, and there is most definitely a risk-on sentiment sweeping equities. However, for all that, there are no real concerns that Salesforce shares are overheated right.
If we take their relative strength index (RSI) reading, for example, which is currently at 63, it tells us that the stock is warm but has plenty of room to run before it’s considered overbought. Investors should look for the stock to continue setting higher highs and lower lows, a pattern which has underpinned the rally of recent months and looks set to do the same into 2025.
