Salesforce.com (CRM.US) is poised to hit the "acceleration key" and Morgan Stanley has joined the pre-earnings bullish ranks.

Before Salesforce.com (CRM.US) releases its fourth-quarter financial results on February 26, Morgan Stanley published a research report to reiterate its "Overweight" rating on Salesforce, raising its target price from $390 to $429.

Morgan Stanley's survey indicates that Salesforce's recovery from the global outage in July last year has exceeded expectations. Given the positive revisions and the potential for the annual recurring revenue (ARR) growth to accelerate to ~25% in the next 1-2 years, Salesforce's stock price may rise to $550 in a bullish scenario.

Based on the channel survey as of the end of January, Morgan Stanley is optimistic about Salesforce's fourth-quarter performance. Morgan Stanley expects Salesforce's net new annual recurring revenue (NNARR) to decline 34% YoY in the fourth quarter, but better than market expectations and with room for upward revisions, as the order volume showed signs of improvement after the low point in the fourth quarter of last year.

Morgan Stanley expects the initial 2026 fiscal year revenue/ARR guidance to be 20% YoY, in line with market consensus, with a free cash flow (FCF) margin of over 25%, and is prepared for outperformance and upward revisions in the new fiscal year. Overall, Morgan Stanley still believes that Salesforce will become a long-term winner as the market consolidation reduces the number of market participants.

Morgan Stanley said that Salesforce has quickly risen to a market leader as the next-generation SaaS security platform. The continuous growth of core terminal market share, along with the growing emerging modules (identity protection, cloud workload protection), and its favorable AI positioning will help Salesforce maintain a revenue growth rate of over 20% in the long term.

It is noteworthy that Goldman also looks favorably on Salesforce before the earnings, reiterating its "Buy" rating and giving a target price of $400. Goldman believes Salesforce is one of the most strategically important application software companies it covers. Salesforce is in a favorable position to benefit from cyclical improvements, and AI may become a long-term growth accelerator as it increasingly shifts to the application layer.