Overview
Citizens analyst Patrick Walravens has reiterated a Market Outperform rating and a $315.00 price target on Salesforce.com (NYSE:CRM), a level that the analyst calculates implies roughly 66% upside from a stated current share price of $189.72. InvestingPro data cited by the analyst indicates the stock is trading close to its 52-week low of $180.24 and, on the basis of Fair Value calculations, appears undervalued.
Revenue model tensions and profitability
The analyst note highlights a structural tension in seat-based licensing businesses: pressure on the number of seats at the high end of the model and competitive pressure from AI-enabled solutions at the low end. In the analyst's framing, Salesforce faces downward pressure from lower-priced AI solutions on the lower end of its product stack and seat-quantity pressure at the higher end, creating a dual set of forces affecting revenue expansion.
Despite these competing dynamics, Salesforce reported strong gross profit margins of 77.7% and has produced $40.3 billion in revenue over the last twelve months, metrics investors and analysts continue to weigh against near-term headwinds.
Agentforce traction
A focal point in the analyst coverage is Salesforce's own AI initiative, Agentforce. The business surpassed $500 million in annual recurring revenue last quarter and, according to the analyst, grew at more than three times year-over-year. The fiscal third quarter performance was also described as Agentforce crossing the $500 million ARR threshold, representing a 330% year-over-year increase.
Contract wins and corporate moves
In a material contract development, Salesforce secured a $5.6 billion agreement with the U.S. Army. The 10-year contract is to be executed by Computable Insights, a Salesforce subsidiary focused on national security operations. The win was listed among recent company developments alongside equity awards that Salesforce granted to employees from recent acquisitions - Apromore, Spindle AI, and Informatica - under the company’s Inducement Equity Incentive Plan.
On the personnel front, Ryan Aytay, head of Salesforce’s Tableau unit, announced his departure after nearly 20 years at the company.
Analyst positioning and market context
Beyond the Citizens coverage, Stifel has reiterated a Buy rating on Salesforce with a $300.00 price target, noting the stock has declined roughly 25% year-to-date. Separately, Citizens is reported to have reiterated its Market Outperform stance while maintaining a price target of $405.00. These varied price targets and reiterated ratings underline continued bullish conviction among some sell-side analysts even as the shares trade near yearly lows.
Conclusion
The combination of robust gross margins, sizable trailing revenue, rapid Agentforce growth, and a large government contract are central to recent analyst optimism. At the same time, tensions inherent in seat-based licensing and competitive AI offerings introduce clear near-term revenue-model uncertainties that market participants will continue to monitor.
Key points
- Agentforce exceeded $500 million in annual recurring revenue and grew north of three times year-over-year - a principal growth driver for Salesforce.
- InvestingPro data places the stock near a 52-week low of $180.24, with Fair Value calculations suggesting undervaluation.
- Salesforce won a $5.6 billion, 10-year contract with the U.S. Army to be delivered by its Computable Insights subsidiary.
Sectors impacted
- Software and enterprise SaaS
- Defense and national security technology
- Artificial intelligence tooling
Risks and uncertainties
- Seat-based licensing dynamics - pressure on seat counts at the high end and competition from AI solutions at the low end - could constrain revenue growth.
- Leadership changes, such as the departure of the Tableau unit chief after nearly 20 years, create near-term management and execution uncertainty for that business area.
- Share-price weakness - the stock has fallen roughly 25% year-to-date, as noted by market commentary - reflects market sensitivity to these operational and competitive pressures.