Wedbush analysts would be buying Salesforce (NYSE:CRM) stock on weakness despite its recent post-earnings dip, viewing it as a minor setback in a broader growth trajectory.
Salesforce's April results were slightly below Street expectations, and its July guidance was softer than anticipated. However, the company maintained its FY25 guidance, demonstrating confidence in meeting year-end goals despite longer sales cycles observed during the quarter.
Wedbush sees this as a transitional period, with Salesforce on track for higher growth, improved margins, and increased free cash flow (FCF).
The analysts maintain an Outperform rating on the stock, albeit with a reduced price target from $325 to $315. They remain optimistic about Salesforce, particularly as the AI narrative continues to develop.
"We would be buyers on weakness this morning as seeing the forest through the trees this is a turnaround in motion for a premier tech stalwart with a massive installed base led by one of the best CEOs in the global tech landscape in our view," said the firm.
Salesforce reported total revenues of $9.13 billion, closely aligning with the Street’s $9.15 billion estimate. However, billings were $6.18 billion, below the $6.48 billion expectation, impacted by pressures on professional services, license revenue volatility, and a cautious buying environment. Despite these challenges, the remaining performance obligation grew 15% year-over-year to $53.9 billion.
For the July quarter, Salesforce expects total revenue between $9.20 billion and $9.25 billion, slightly below the Street's forecast of $9.35 billion. However, the company reaffirmed its full-year revenue guidance of $37.7 billion to $38.0 billion and raised its EPS guidance.
Wedbush believes Salesforce is strategically adjusting its go-to-market organization to focus on long-term productivity and AI monetization within its extensive installed base. This could potentially boost overall revenue by over $4 billion annually by 2025, presenting a significant opportunity for Salesforce.
"We continue to believe this is a major land grab opportunity that could significantly benefit CRM over the coming years," wrote Wedbush.