Salesforce Rallies As Investors Bet On Refocus And Margin Expansion

Core Insights - Salesforce CRM shares experienced a rise due to renewed investor optimism, indicating a potential turning point for the company amid challenges like slowing growth and rising competition [1] - Analyst Gil Luria upgraded Salesforce from Underperform to Neutral, maintaining a price target of $225, which reflects a valuation of 18.5 times the updated fiscal 2027 EPS estimate [2] Financial Performance - Salesforce has underperformed compared to the iShares Expanded Tech-Software Sector ETF, lagging by 48 points year-to-date and 27 points since the fiscal first-quarter 2026 earnings report [3] - Projected organic revenue growth for Salesforce is 8% in fiscal 2026 and 7% in fiscal 2027, excluding Informatica [4] - The fiscal second-quarter 2026 revenue is projected at $10.08 billion with an EPS of $2.78 [6] Market Dynamics - The company's guidance for fiscal second-quarter 2026 indicates that cRPO growth is expected to be under 10% in constant currency, highlighting challenges from market saturation and competitive pressures [4] - Strong adoption of Agentforce is noted, but issues such as tech debt and unclear AI strategies are limiting expected efficiency gains [5] Investor Sentiment - Activist investor Starboard Value increased its stake in Salesforce by 47%, signaling pressure on the company to refocus on core growth and margin expansion [5]