Karishma Vanjani

Salesforce gave investors something to worry about when it released its earnings late Wednesday: Its projections for sales and earnings in its fiscal first quarter didn't live up to expectations, and neither did its forecast for annual revenue.

Yet much of Wall Street is optimistic about the stock. Thank Agentforce.

The software company, owner of Slack, had a solid fourth quarter. But it said it expects earnings of $2.53 to $2.55 per share from sales of $9.71 billion to $9.76 billion in the current quarter, ending in April. Analysts polled by FactSet were anticipating $2.62 per share from sales of $9.9 billion.

Even the upper end of the range of forecasts for sales in the 2026 fiscal year -- management told investors to expect $40.5 billion to $40.9 billion -- fell short of the market consensus of $41.4 billion.

The stock fell 3% to $298 early Thursday morning.

But the sell-side community doesn't seem to be concerned. So far, none of the analysts tracking the stock have moved to a Sell rating after the earnings, and 44 of the 56 say to Buy, according to FactSet. Some doubled down on those calls after the earnings.

"We would be buying into weakness as revenue should accelerate from F1Q>F2Q, margins are set expand, and the momentum around Agentforce should build over the FY," wrote Evercore's Kirk Materne. He reiterated a Outperformance rating and $420 price target for the stock.

Agentforce, software that enables companies to build and deploy AI agents that can optimize marketing campaigns, resolve customer queries and do other jobs, has shown strong early momentum. The company has closed 5,000 deals for the software with customers to date.

Arjun Bhatia from William Blair shares a similar view on Agentforce: "We believe momentum will build through the year, with some revenue contribution in fiscal 2026 and more material contribution in fiscal 2027. "

The one Sell rating, saying the stock is badly overvalued, is from Guggenheim. Their target for the price is $247, but the firm says it could go higher if Agentforce brings an unexpectedly large jump in annual contract values, among other potential positive factors.

Write to Karishma Vanjani at karishma.vanjani@dowjones.com.

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February 27, 2025 09:26 ET (14:26 GMT)

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