Salesforce Shares Surge After Company Lifts Revenue Guidance
Salesforce shares surged over 4% in pre-market trading on Thursday after the San Francisco, California-based software company lifted its full-year revenue outlook.
The leading provider of enterprise cloud computing solutions raised fiscal 2022 revenue guidance to a range of $26.25 billion to $26.35 billion and initiated FY23 revenue guidance of $31.65 billion to $31.80 billion.
The company initiates FY23 GAAP operating margin guidance of 3.0% to 3.5% and non-GAAP operating margin guidance of 20.0%.
Following this, Salesforce shares rose over 4% to $269.85 in pre-market trading on Thursday.
“A shift in operating philosophy, better balancing growth and profitability, and traction on margins YTD narrow the AD focus to durability of margin expansion and org. growth potential of the expanded portfolio. Strong demand trends and solid unit economics keep us bullish on both fronts,” noted Keith Weiss, equity analyst at Morgan Stanley.
“Salesforce remains one of our best secularly positioned names given enterprise IT spend prioritized towards digital transformation. Following the underperformance in shares post the Slack deal announcement, we see a favorable risk/reward and an attractive valuation for a leading franchise. While we continue to see the $28 billion price tag for Slack as high, we are more constructive on the asset after two quarters of improving new customer and billings growth at Slack. Further, we see guidance for flat FY22 operating margin, despite Slack dilution, as sign of better cost efficiencies and opportunity for margin expansion once M&A headwinds fade.”
Salesforce Stock Price Forecast
Thirty-seven analysts who offered stock ratings for Salesforce in the last three months forecast the average price in 12 months of $304.94 with a high forecast of $350.00 and a low forecast of $242.00.
The average price target represents a 17.66% change from the last price of $259.17. From those 37 analysts, 30 rated “Buy”, seven rated “Hold” while none rated “Sell”, according to Tipranks.
Morgan Stanley gave the base target price of $305 with a high of $390 under a bull scenario and $210 under the worst-case scenario. The firm gave an “Overweight” rating on the cloud-based software company’s stock.
Several other analysts have also updated their stock outlook. Monness Crespi & Hardt upped their price objective to $300 from $290 and gave the company a buy rating. Sanford C. Bernstein upped their price objective to $290 from $266 and gave the company a market perform rating. Canaccord Genuity increased its price target to $270 from $200 and gave the company a buy rating.
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