Salesforce Inc (NYSE:CRM) looks to turn things around with shares trading near three-year lows when the company reports first-quarter financial results on Wednesday after market close.
Here are the earnings estimates, what experts are saying ahead of the report and the key items to watch.
• Salesforce stock is trading at lower levels. What should traders watch with CRM?
Salesforce Q1 Earnings Estimates
Analysts expect Salesforce to report first-quarter revenue of $11.06 billion, up from $9.83 billion in last year’s first quarter, according to data from Benzinga Pro.
The company has beaten analyst estimates for revenue in seven of the past 10 quarters, including the most recently reported fourth quarter.
Analysts expect Salesforce to report earnings per share of $2.96 for the first quarter, up from $2.58 in last year’s first quarter.
The company has beaten analyst estimates for earnings per share in five straight quarters and in nine of the past 10 quarters overall.
What Experts Are Saying
Freedom Capital Markets Chief Market Strategist Jay Woods cautions investors on Salesforce ahead of the earnings print, warning that the stock has traded higher after the last two quarterly reports, but only higher after four of the last eight reports overall.
“Salesforce keeps putting up the numbers, but like many of its software peers, Wall Street isn’t buying the celebration,” Woods said in a weekly newsletter.
Woods said the key going forward is how AI is impacting Salesforce’s per-seat licensing model.
“It’s that existential overhang keeping its downtrend firmly in place despite the beats.”
The market expert said Salesforce CEO Marc Benioff sees Agentforce as the answer, but investors want proof that AI agents aren’t cannibalizing existing revenue.
On the Salesforce stock chart, Woods says there is support at the $167 level, but a head-and-shoulders topping formation could see shares going to $140 if the $167 level can’t hold.
BTIG analyst Allan Verkhovski is predicting that the first quarter will not provide the optimism needed for Salesforce investors. The analyst has a Buy rating and price target of $255.
The analyst said the first quarter is seasonally the weakest for bookings and it may take another quarter to provide “investor confidence.”
“From here, further share outperformance depends on confidence in a second-half growth acceleration,” Verkhovski said.
The analyst said there is long-term upside to the stock price.
“The debate on CRM’s execution with Agentforce will likely continue in the years ahead, while the current valuation suggests to us that some investors are pricing in CRM’s demise.”
Key Items to Watch
In April, Salesforce announced an extended partnership with Google Cloud that enables AI agents to run end-to-end workflows on both platforms. This partnership could be covered in more detail by the company and what the financial outlook could look like with partnering with one of the largest companies in the world.
The company’s remaining performance obligations will be a key area to watch in the first-quarter results. This key figure totaled $72.4 billion in the fourth quarter, up 14% year-over-year.
Benioff remains confident that Agentic AI “is a tailwind” for the company, according to comments from the fourth-quarter results.
Software companies have gotten hit hard over the last year due to fears of the AI replacement trade. Salesforce will likely need to continue to show how it can work alongside AI and also how some of its platforms and customer tools are AI replacement-proof.
Salesforce Stock Price Action
Salesforce stock is up 0.17% to $180.38 on Tuesday versus a 52-week trading range of $163.52 to $278.81. Salesforce stock is down 28.4% year-to-date and down 34.5% over the last year. The stock is at levels last seen in March 2023.
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