Will AI save Salesforce.com?

Top-line growth is still an issue, but Roth MKM analyst Richard K. Baldry thinks there are green shoots appearing for SaleForce.com (SalesForce.com Stock Quote, Chart, News, Analysts, Financials NYSE:CRM).

In a research update to clients December 4, Baldry maintained his “Buy” rating and raised his price target on the stock from $335.00 to $395.00.

The analyst says he sees a way out for CRM’s quandary.

“CRM’s revenue growth has been weak for two years, necessitating cost cuts and controls much at odds with its employee-coddling culture. While growth remains weak, its stock has rallied to new highs on record earnings. To rally further, we believe growth needs to improve, an outlook that may have found a catalyst in its AI-driven Agentforce offerings which give clients a path to automate many labor-intensive operations”

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The analyst thinks the company will post EPS of $10.00 on revenue of $38.1-billion in fiscal 2025. He expects those numbers will improve to EPS of $10.05 on a topline of $41.4-million the following year.

“Despite CRM’s challenges, we view the rapid emergence of generative AI technologies as likely to drive a targeted re-acceleration to its IT spend in the next 12-18 months,” Baldry added. “CRM’s ability to support AI-centric technologies across most of its offerings (and particularly with its Agentforce offering) leaves it likely to be a material beneficiary of any AI-centered spending rebound. This potential upside growth driver is the primary reason we are retaining our Buy rating and believe a growth rebound ahead warrants our increased $395 price target ($335 prior).”