Written by Sinad Karahimetovic
Salesforce (NYSE:) shares rose about 1.5% in the primary market Thursday after the company introduced its new medium-term financial goal on Investor Day 2022.
Salesforce said it’s targeting $50 billion in revenue in fiscal year 26 (representing a 17% compound annual growth rate). Target adjusted operating margin is set at 25%+, including future mergers and acquisitions. Looking at the near term, CRM’s fiscal year 23 revenue guidance is set at $30.9 billion – $31 billion.
Here’s how Salesforce analysts saw Investor Day 2022.
An analyst at Morgan Stanley said: “The accelerated pace of innovation on the product side, more detailed views of significant opportunities within the customer base, strong commitments to improving efficiency, and a growing focus on shareholder value point to a 25% compound annual growth rate + EBIT and work to improve business confidence. investors in those goals.
The BMO analyst (reduced PT to $190) added: “We believe Dreamforce was a net positive which was highlighted by the 25+% margin target for FY26 which includes any potential mergers and acquisitions. Management maintained the audit target of 50 billion $26 in fiscal year, which we believe is reachable but is by no means an easy target given adverse macroeconomic and FX conditions. Finally, we believe CRM can hit the margin target even with a negative revenue variance.”
A Deutsche Bank analyst noted: “We walked away from Dreamforce and Investor Day very comfortable with CRM as a long-term idea, backed by constructive partner meetings and management’s firm commitment to shareholders. As for the demand environment, our fieldwork helps validate the massive Salesforce opportunities market (updated $290 billion + CY26E TAM) and ability to capture, despite some sobriety about the overall background.”
“We reiterate our strong rating on Salesforce after the Company Analysts Day and Dreamforce Users Conference, where messages about profitable growth should be well received by investors,” said an analyst from Raymond James.
Analyst Piper Sandler noted that: “Clearness on the path to operating margins of 25% (versus 17% 5-year average) in FY26 reinforces the bullish case scenario. Given that stocks are down 42% since the beginning of the year, it appears that the ratio of Risk and reward are increasingly favorable for CRM with 4x CY23E EV/S and 20x CY23E EV/FCF Growth investors looking to rebuild their positions in the program should consider CRM The company is buying shares at these low levels for the first time since Over 20 years ($10 billion licensed), should you? We reaffirm weight gain.”