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Citi Boosts Salesforce Price Target Amid Margin Optimism and Revenue Uncertainties

Citi's recent report reveals an upgraded price target for Salesforce, reflecting margin optimism but forecasting some revenue uncertainties.

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Citi Raises Salesforce Price Target

Analysts at Citi have raised the company's price target on Salesforce (NYSE: CRM) from $210 to $229. This update maintains a Neutral stock rating and comes before Salesforce's anticipated earnings release.

Mixed Responses and 'Salesforce Fatigue'

The analysts expressed some concerns despite a mixed response from Salesforce partners during the quarter, which was not significantly worse than the feedback received in 4Q22. They believe there is a limited upside to top-line numbers for the fiscal year due to macro uncertainties and 'Salesforce fatigue.' These factors are impacting renewals and exposing CRM to seat-based churn.

Potential for Margin Growth

However, Citi analysts see greater potential in the margin space. "We'd look to get more constructive on sustained cost optimizations or further reductions in force (RIFs)," they noted. This indicates that Citi's confidence lies more in the firm's ability to improve profitability through cost efficiencies rather than boosting its top line.

FY24 Predictions and Current Performance

The firm decided to leave its FY24 top-line estimate for CRM unchanged but projected increased margins "given further signs of efficiency." Currently, Salesforce shares are trading more than 1% higher on Friday, trading above the $213 mark.