Here’s what Wall Street experts are saying about Salesforce ahead of earnings

Salesforce (CRM) is scheduled to report results of its second fiscal quarter after the market close on Wednesday, August 28, with a conference call scheduled for 5:00 pm ET. What to watch for:

GUIDANCE: Along with its first quarter earnings report, Salesforce guided to 2025 adjusted earnings per share of $9.86-$9.94 on a revenue of $37.7B-$38B, which compared to analyst estimates of $9.76 and $37.98B, respectively, at the time of the report. Consensus for EPS has since risen to $9.89, while consensus for revenue has dropped to $37.84B. The company also provided second quarter adjusted EPS guidance of $2.34-$2.36 on revenue of $9.2B-$9.25B. Consensus for earnings, which was at $2.40 at the time, has dropped to $2.36, and consensus for revenue, which was at $9.34B, has fallen to $9.23B.

PARTNERSHIPS, FEATURES: In May, Beyond (BYON) announced an expanded investment in Salesforce to drive greater customer loyalty and deliver more personalized shopping experiences. Additionally in May, IBM (IBM) and Salesforce announced an expanded strategic partnership to bring together IBM watsonx AI and Data Platform capabilities with the Salesforce Einstein 1 Platform for greater customer choice and flexibility in AI and data deployment. Mastercard (MA) and Salesforce also announced in May a new integration to enhance trust across the ecosystem, helping customers speed up the resolution of transaction disputes, and reduce costs associated with resolving them. The company also expanded its Einstein Copilot capabilities in May by introducing new features for marketers and merchants. In July, Salesforce and Workday (WDAY) announced plans for a new AI employee service agent that will automate tasks, provide personalized support, and surface data-driven insights. Box (BOX) and Slack also announced an expanded partnership in July to bring secure AI to enterprise content to transform the way organizations work.

ANALYST VIEWS: On Wednesday, JMP Securities maintained an Outperform rating on Salesforce with a $342 price target ahead of the company’s Q2 report. Channel checks have been mixed overall, with the main positive being that Salesforce is exercising its pricing power, with five customers telling JMP about price increases that generally range from 10%-20%. While on the negative side, some customers are reducing seats or churning off all together in response to the pricing, and quota attainment seems to be challenging for many in the sales organization, the analyst said. The firm said that while Salesforce has matured and the environment remains challenging with deal scrutiny, it continues to like the shares for long-term capital appreciation.

Meanwhile on Tuesday, Barclays said it sees a “muted share response for Salesforce’s Q2 print, given a lack of a meaningful positive catalysts.” While the setup for the model is “undemanding,” worse reseller checks are “muddying this,” the analyst said. The firm sees tough Q3 current remaining performance obligation compares and prior margin expansion as being limiting factors. Barclays said its reseller survey came in more negatively, outside of a few select data points around artificial intelligence. Just 20% of resellers reported some level of outperformance to their plans versus 64% last quarter, “a level that we have not seen in this survey since the pandemic-impacted quarters,” wrote Barclays. The firm kept an Overweight rating on Salesforce with a $305 price target as part of a Q2 preview.

Additionally on Monday, Citi raised the firm’s price target on Salesforce to $290 from $260 and kept a Neutral rating on the shares. The firm heads into the company’s Q2 results with a “relatively balanced view.” While partner inputs remain cautious and there is risk of slowing in the second half of 2024, Q2 consensus estimates look achievable, with slightly more favorable currency de-risking the fiscal 2025 revenue guidance, the analyst said. The firm believes incremental currency improvements should offset any organic underperformance at Salesforce.