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The company, which on Wednesday posted its slowest quarterly revenue growth since it went public in 2004, has been targeted by four activist investment firms — including Elliott Management Corp which has nominated directors to its board.
“The quarter provided nearly everything investors could hope for,” said RBC analyst Rishi Jaluria, one among 22 analysts who raised their price targets by as much as $60.
“We believe Salesforce is headed in the right direction.”
Salesforce said it has taken actions to cut costs including workforce reduction and shrinking its real estate footprint. These are “just the first steps,” executives told analysts.
The company forecast adjusted operating margin of 27% for this year, much higher than the 22.5% it reported in fiscal 2023. That was also above the estimate of about 23%, according to analysts.
Its annual profit forecast between $7.12 and $7.14 per share on an adjusted basis, was also well above the $5.84 expectation, according to Refinitiv data.
Still, Salesforce’s first-quarter revenue forecast implied growth of 10%, which could mark slowing growth, but was higher than analysts’ estimates of about 9%.
The business software maker’s plan to integrate artificial intelligence into all of its cloud as well as Slack, data analytics platform Tableau and MuleSoft platform also gave a fillip to the stock.
Elliott, which had been in talks with Salesforce leading up to the earnings statement, said the “announcements represent progress towards regaining investor trust”.
Other activist investors with a stake in Salesforce include Starboard Value, Inclusive Capital Partners and ValueAct Capital. They have pushed for higher growth and margins, more share buybacks and raised concerns about recent acquisitions.
