Salesforce.com Inc. (CRM) continued its upward momentum, outperforming the S&P 500 and rising by approximately 69.2% compared to the S&P’s gain of about 33.3% since the start of 2020. The cloud services company saw positive second-quarter results, and long-term 13F metrics between 2004 and 2021 suggest that Salesforce’s investment potential remains strong.
Salesforce is a cloud-based software company and global specialist in customer relationship management (CRM). It provides CRM services and a suite of applications that focus on customer service, marketing automation, analytics, and application development. Salesforce’s business model has become more attractive during the coronavirus pandemic by allowing customers to use their cloud technology for improved communication and information-sharing during a time of increased telework and remote collaboration. In addition to Salesforce’s 2021 acquisition of Slack Technologies, Inc. that complemented its communication services, Salesforce also recently held its annual Dreamforce conference. The conference focused on helping companies find solutions to problems related to the pandemic and highlighted the importance of digital headquarters.
Hedge Funds Are Buying
Hedge funds and institutions were increasing shares in their portfolios. The aggregate 13F shares held by hedge funds increased to about 185.5 million from 174.1 million. Of the hedge funds, 69 created new positions, 176 added to an existing one, 28 exited, and 110 reduced their stakes. Overall, institutions increased their aggregate holdings by about 1.9% to approximately 713.3 million from 700.2 million.
Positive Long-term Projections
Analysts estimate that earnings will fall slightly by January of 2022 and anticipate a subsequent rise by 2023 and 2024 of approximately 4.7% and 20.7%, respectively. These year-over-year changes would bring earnings to $4.62 per share by 2023 and $5.57 by 2024. Revenue estimates are very encouraging, with initial revenue figures for January 2022 of $26.3 billion, followed by more year-over-year estimated increases that would bring revenue to $37.0 billion by 2024, up from $31.8 in 2023.
Analysts See Potential
Analysts are optimistic about the stock and raising price targets. Mizuho Financial Group analyst Gregg Moskowitz raised the firm’s price target to $320 from $300 and kept a Buy rating, citing the confidence level of Salesforce’s management team and the quality of sales opportunities. Patrick Walravens of JMP Securities took a positive view of the integration of Slack into Salesforce and raised the price target to $325 from $320, maintaining an Outperform rating. Wells Fargo analyst Michael Turrin kept an Overweight rating on the stock, raising its price target to $340 from $325. Piper Sandler Companies’ Brent Bracelin raised the company’s price target generously to $365 from $280 and shared confidence in a multi-year period of profit expansion and sustained growth.
Salesforce’s history of growth and future multi-year estimates are encouraging for investors. The cloud services company continues to thrive through the pandemic and gain momentum. Analysts’ ratings and price targets speak to the company’s increased value and growth potential.