Morgan Stanley lowered its price target for Salesforce.com (NYSE:CRM) to $287 from $298 but left its Overweight recommendation in place, reflecting a cautious recalibration of valuation while maintaining a constructive stance on the company's prospects.
The firm's recent checks indicate a broadly stable outlook into calendar year 2026, though they point to a bifurcated experience among partners. Agentforce pilots remain active, according to Morgan Stanley, and the firm flagged that a credit ramp is producing opportunities to reset seats within those pilots.
Supporting its view, Morgan Stanley referenced findings from its fourth-quarter 2025 CIO survey, which showed rising use of applications as a means to exploit AI features. The bank said Salesforce screened as a top gainer in terms of GenAI budget share in that survey, suggesting the company is capturing a meaningful portion of incremental AI-related spend among respondents.
On the company's own performance metrics, Morgan Stanley outlined expectations for organic growth in current remaining performance obligations (CRPO) of 10% in constant currency for the fourth quarter, and 9% in constant currency for the first-quarter guide. For fiscal 2027, the firm anticipates subscription revenue growth of roughly 9% to 9.5% in constant currency, alongside operating margins in the neighborhood of 35%.
From a valuation standpoint, Morgan Stanley noted that Salesforce shares trade at about 10 times free cash flow. That multiple represents nearly a 60% discount to the average free cash flow multiple of 24 times for large-cap software peers, as calculated by the firm. Price action at the time cited shows the stock at $185.16, near a 52-week low of $180.24, with InvestingPro data indicating the company appears undervalued versus its Fair Value analysis.
Additional company metrics cited include a gross profit margin of 77.73% and a price-to-earnings ratio of 24.39. The note also referenced upcoming corporate reporting dates, saying earnings are scheduled for February 26 and that Salesforce is preparing to announce its fourth-quarter results on February 25.
Other broker commentary highlights divergent views on near-term growth and AI monetization:
- TD Cowen reiterated a Buy rating and holds a $325 price target, citing an expected roughly $800 million in AI annual recurring revenue and noting a strong uptick in Agentforce activity during the quarter.
- BMO Capital cut its price target to $235 from $275 but kept an Outperform rating, citing modest adoption of Agentforce and Data Cloud as the basis for the adjustment.
- UBS trimmed its target to $200 from $260 and signaled growth concerns following conversations with several customers and partners.
- JMP Securities upgraded the stock to Market Outperform, maintaining a $315 price target and highlighting growth in Agentforce.
Collectively, these broker actions illustrate a range of interpretations of Salesforce's product adoption and revenue mix shifts. Some firms point to tangible early traction in Agentforce and AI-related revenue, while others flag slower-than-expected adoption of specific products such as Agentforce and Data Cloud or express caution after customer and partner discussions.
For investors tracking valuation and operational benchmarks, Morgan Stanley's note juxtaposes the company's solid gross margin profile against a materially lower free cash flow multiple than peers. The firm’s modelling assumptions for CRPO and subscription revenue growth, and its operating margin target, provide explicit near-term expectations investors can use to gauge upcoming results.
Given the range of price targets and the approaching earnings window, market participants will receive additional data points soon that could clarify how AI-related monetization and product adoption are translating into subscription and recurring revenue growth.