Salesforce Stock Set for 30% Upside to Reach New Highs

Key Points

• Salesforce analysts predict this stock can rally higher in 2025, potentially gaining 35% to 50% by year's end.
• The price increases scheduled for August are underappreciated and will provide numerous catalysts for higher prices.
• Capital returns and institutional tailwinds are also driving this market. 

If you are wondering whether Salesforce NYSE: CRM can hit new highs this year, it can, at least according to what the analysts are saying. Their activity capped gains following the FQ1 release but has set this market up to rebound strongly, if not following the FQ2 release, then by the end of the fiscal year.

The primary takeaway from the analysts' activity is that sentiment firmed around the solid Moderate Buy rating and expectation for a 30% upside. The 30% upside aligns with the highs, and the high-end range of targets is a new high. The reason the stock price will move into the high-end range is that recent price increases are underappreciated by the market, serving as a driver for acceleration and sustained strength. 

Among the more bullish recent analyst updates is a reaffirmed Overweight rating and a $404 price target from Morgan Stanley. Analysts at the firm believe the price increases are underappreciated because of their long-term impact on client acquisition, upgrades, and revenue durability.

The price increases create a significant discount for tiered bundles compared to piecemeal services, ranging from 70% to 100% in some cases. They are forecasted to accelerate acquisitions and client penetration of technology.

Upsell and cross-selling opportunities were also noted as significant, long-term drivers for growth. 

Bank of America echoed the Morgan Stanley forecast. Analysts at that firm took a deeper look at Salesforce’s primary business, Service Cloud, and see its growth accelerating in the coming quarters.

In their view, the cyclical growth slowdown experienced over the last few years is coming to an end, and growth will soon begin to accelerate, reaching 9% by the end of the year and 12% in the longer term.

They also reiterated an Overweight equivalent rating and a $350 price target, aligning with the broad market consensus. 

Salesforce Q2 Results Will Be a Catalyst for Share Price Action

Salesforce is expected to begin accelerating its growth as soon as the current quarter. The analysts' consensus, as reported by MarketBeat, forecasts 8.7% revenue growth, up from the 7.6% reported in the previous quarter and 8.4% in the same period last year.

The bar is set high with 88% of the 42 analysts lifting their estimates over the quarter, but outperformance is still possible. The company revealed bullish momentum in Q1, outperforming the consensus estimate, with remaining performance obligation (RPO) up 12%, and other leading indicators pointing to acceleration.

The guidance will be the critical factor. The company needs to initiate a strong third quarter, with the full year reflecting improving momentum. The consensus is for revenue growth to continue accelerating at a marginal pace, resulting in a near -9% this year and a slightly hotter pace in 2026. 

Salesforce Capital Returns Are Why Institutions Like It

Institutions own a solid 80% of Salesforce stock and provide a strong tailwind for market action, buying on balance in 2025, including the first weeks of Q3. Among the reasons is the company’s cash flow, balance sheet, and capital return, which are sustainable and expected to increase over time.

The capital return includes a token dividend yielding approximately 0.65% as of mid-July and share repurchases that substantially reduce each quarter's count. The buyback activity in Q1 reduced the count by an average of 1.5%, a pace expected to be sustained through the year’s end.

The price action in CRM shares isn’t robust but aligns with a long-term uptrend and shows potential for upward movement. The uptrend is marked by the 150-week EMA, which is rising and pointing higher; there are signs of support and potential for a rebound in the price action in 2025 and in the technical indicators.

The MACD and stochastic align with a strong support level and are set up to fire converging buy signals, provided a positive catalyst emerges.