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Salesforce's Organic Revenue Growth Reacceleration Views May Be 'Good Enough' to Ease Concerns, UBS Says

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Salesforce's Organic Revenue Growth Reacceleration Views May Be 'Good Enough' to Ease Concerns, UBS Says

Salesforce's (CRM) views on organic revenue growth reacceleration in the second half of the year may be "good enough" to help ease investor concerns, UBS Securities said Thursday.

Late Wednesday, the customer relationship management platform increased its full-year revenue guidance after delivering a fiscal second-quarter beat.

"Exceptional (second-quarter) bookings, along with near-record low attrition drove our (second-quarter current remaining performance obligation) beat," Salesforce Chief Financial and Operating Officer Robin Washington said on an earnings conference call, according to a FactSet transcript.

The company remains on track for second-half organic revenue reacceleration, Washington told analysts, adding that "contract length terms for new business and renewals are increasing across all segments."

The reaffirmation may be "good enough," UBS analyst Karl Keirstead said in a note to clients Thursday. "(Wall) Street sentiment had turned fairly cautious on concerns that Salesforce might walk-back its (second-half) acceleration guide given weak CRM software demand signals."

UBS increased its price target on the Salesforce stock to $240 from $210.

"While this print was better than feared, we're comfortable staying patient and remaining neutral-rated until we have more visibility into the magnitude of the (second-half/2027) acceleration, as well as greater confidence in Salesforce's AI suite," Keirstead said.

The company's shares were up 21% in Thursday afternoon trade. The stock has dropped 6.1% so far this year.

"Salesforce's growth metrics are very mixed, but do not show strong evidence of AI displacement, bolstering the growing view that apps may be a more resilient category than thought," Keirstead said. "Second, the notion that Anthropic is co-developing a Claude-based product with Salesforce serves to de risk the sector."

Price: $244.76, Change: $+39.14, Percent Change: +19.04%

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