Oppenheimer analyst Brian Schwartz reiterated an Outperform rating on the shares of Salesforce, Inc.
The analyst believes Salesforce is well positioned to benefit from vendor consolidation trends, AI product prioritization, improving business efficiency, and the ability to enter new markets, which likely set the stage for upward margin and cash flow revisions beyond the current consensus.
Schwartz also applauds the recent return of several prior successful leaders at the company, such as EVP & GM of Sales Cloud Ketan Karkhanis, as a positive as it likely indicates that these leaders see an attractive future for the company.
Overall, Salesforce is one of the "healthiest long-term profitable growth stories" in the SaaS/applications software universe, led by a visionary CEO, the analyst adds.
The analyst remains upbeat about the new Leadership at Slack, which targets better sales enablement and positions Slack as the workflow and engagement layer of the Salesforce Platform.
The analyst mentions that CRM's AI Cloud Starter pack pricing (i.e., $360K ACV) reveals that it's targeted at large enterprise customers.
Salesforce is poised to gain from margin growth and an accelerating FCF growth trajectory, increased multi-cloud adoption, and success with verticalized solutions, the analyst notes.
He adds that the company's generative AI embedded in the core Salesforce products propel more significant monetization activity within the enterprise-installed base.
The analyst sees an upbeat tone on demand from vertical SaaS and back office software suppliers than from the front office and SMB market vendors.
Price Action: CRM shares are trading higher by 0.11% to $209.22 on the last check Wednesday.
