CRM

Investors never feel fully satisfied with their takes but I am very close to this feeling of contentment in high spirits when watching at my mid-term targets clearly transcended in Salesforce positions. In fact, the current state of my stakes in this giant cloud platform creator for enterprises exceeds my wildest expectations. Initially I projected a maximum profit level up to 30%, betting on a moderate breakthrough just above the previous historical high around $317 per share. Being bought a bit below $255 in late August, it can be sold at $360 or even higher now, which would provide me with over 42% of net income in approximately three months. I am going to accept this opportunity, as there are seemingly no fundamental grounds behind much higher price goals.

The stock's value grew in a period between two solid quarterly reports and then it has gained a more than 12% of additional momentum on raising the lower end of its 2024 full-year revenue forecast and a fiscal 2025 profit guidance, despite the company's Q3 earnings fell slightly short of Wall Street estimates. Salesforce announced EPS of $2.41 on revenue of $9.44 billion vs analyst poll preliminary numbers for EPS at $2.44 on revenue of $9.35 billion. Of course, the uptrend in revenue persists, while the business has a 14% surplus in EPS year-on-year, but the previous two quarters were better in absolute numbers of EPS, i.e. $2.44 and $2.56 respectively. For the current quarter, Salesforce guided EPS varying in a range of $2.57 to $2.62 on revenue in the range of $9.90 billion to $10.10 billion, with an annual range for EPS between $9.98 and $10.03 in 2025 and a revenue guidance between $37.8 billion to $38.0 billion, compared with a prior inner estimate of between $37.7 billion to $38.0 billion.

This difference is surely pleasing to the eyes but is not a pure delight. The forecast may additionally cost a one-off double-digit percentage gain but hardly could provide much more on a regular basis. I mean, Salesforce is now worth the higher price the market indicates, yet the fast move may also deserve some correction soon. It gapped up on the hype around the company’s AI feature, named Agentforce and being able to perform many useful corporate tasks autonomously. Salesforce said that its Agentforce closed over 200 deals in just one week and it needs to hire 1,400 employees in the current quarter to support the growing demand. Yet, the company's price to earnings ratio is now even higher than with some of the “Magnificent Seven” tech stocks valuation.

I love the company, as it brought me much profit and joy, but it doesn’t excite me anymore. Therefore, I will sell a half of my stake in Salesforce at current price levels, and put a stop loss order just below $255 per share for the second half of the stake. It will be some kind of a tribute to recently raised price targets on the stock from $390 to $440 by several big investment banks like the Bank of America, RBC Capitals or Stifel. "Q3 results suggest that the company is leading the way in an agentic AI cycle with Agentforce," analysts at The Bank of America said, while emphasizing "meaningful customer interest" for "this emerging product cycle", which "is not derailing margin expansion".

If these reputable institutions are thinking right and better than me on target updates for CRM, I would be happy as well by earning more money on the rest of my old buy position. Meanwhile, RBC Capital raised its target to $420 but also expressed some caution, suggesting that "the market's expectations might be outpacing the near-term reality for the company". Again, it was Salesforce's own CFO, Amy Weaver, planning to step down after four years in the role, who recently admitted that it may still be early for Agentforce to contribute significantly to the company's financials.