Bottom line:
Most sell-side analysts still classify Salesforce (CRM) as a “Buy”, and the stock is trading at a meaningful discount to their average 12-month price target (~ 19 % upside). On valuation, CRM does not look cheap on absolute earnings (P/E ≈ 41×), but it does screen as inexpensive on a sales multiple (P/S ≈ 6.5×) versus large-cap software peers (8-18×). That mix of below-peer sales multiple, solid free-cash-flow generation, and healthy growth keeps the consensus view tilted bullish rather than neutral.
1. Street view today
| Metric |
Value |
Comment |
| Current price |
$263.17 |
4 Jun 2025 close1 |
| Mean 12-m price target |
$324.38 |
∼ +19 % implied upside2 |
| Distribution of 10 fresh ratings (May-Jun 2025) |
• Strong Buy 3
• Buy 2
• Neutral/Hold 3
• Sell 2 |
Weighted average ≈ 2.4 on a 1-5 scale → “Buy” leaning1 |
Take-away: the typical rating is Buy, with only a minority of outright Sells.
2. How does the valuation stack up?
• Earnings multiple: CRM trades modestly above MSFT/ADBE but well below high-growth peers such as NOW and INTU.
• Sales multiple: CRM’s 6.5× is the lowest in the peer set, 20-50 % below more mature megacaps (MSFT, ADBE) and >60 % below high-growth ServiceNow.
Interpretation: If you believe Salesforce can keep expanding margins—as management continues to emphasize efficiency—then the relatively low P/S suggests there is room for multiple expansion, even if the P/E looks rich on today’s GAAP earnings.
3. Is CRM “undervalued” right now?
- Relative valuation: Cheap on sales, mid-pack on earnings → mildly undervalued relative to software peers, especially given CRM’s improving operating margin profile.
- Absolute valuation: 40× earnings is hardly a deep-value price, so the label “undervalued” hinges on your growth and margin assumptions.
- Market expectations: With the stock ~19 % below the Street’s mean target and the consensus rating at Buy, the professional community broadly views current levels as attractive, not stretched.
4. What to watch next
• Management’s FY 2026 revenue guidance at Dreamforce (typically September).
• Progress on operating-margin target (31 % medium-term).
• Uptake of Einstein AI + Data Cloud bundles, which could justify higher revenue multiples.
• Large-cap software sentiment—sector rotations can swing relative valuation quickly.
In short: While CRM is not a bargain basement stock, its comparatively low sales multiple and the Street’s bullish stance justify calling it slightly undervalued today—particularly if margin expansion stays on track.
6/5/2025 10:27am
