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- Bank of America adjusted its price target for Salesforce stock from $200 to $235 on Thursday.
- That represents about a 26% upside from the current price of $186.
- "Margin outlook reflects major step towards disciplined growth," analysts said.
Bank of America strategists raised their price objective for Salesforce stock from $200 to $235 on Thursday, following a better-than-expected fourth-quarter earnings report from the company on Wednesday.
Shares of Salesforce jumped more than 11% Thursday to $186, and BofA's adjustment to its price target represents a roughly 26% upside for the stock. Year-to-date, shares have climbed just under 40%.
In a note to clients, the BofA strategists praised the Salesforce's total revenue, cloud sales and services, and company-wide changes, among other factors that informed the analysis.
The upbeat earnings report reflects "a major step forward in Salesforce's commitment to disciplined growth and delivering [free cash flow] conversion," BofA said, adding that the EPS of $1.68 easily exceeded their forecast of $1.36.
They noted that the year-ahead outlook from the company is well above the bank's expectations.
On the earnings call this week, chief executive Marc Benioff warned that the enterprise-software giant faces a more difficult economic backdrop, which necessitates a focus on profits rather than buying companies or growing sales.
"'01, '02, bad recession, we had to pull back," Benioff said. "'08, '09, we had to pull back and reassess. We're kind of looking at this moment as, 'Hey, we can reassess.'"
The company, Benioff explained, has scrapped its goal of hitting $50 billion of annual revenue in 2026, and also disbanded its mergers-and-acquisitions committee.
In BofA's view, Salesforce looks poised to continue expanding its margins.
"Reiterate Buy and view Salesforce as a top pick and emerging quality GARP stock," the bank said, referring to the acronym for growth at a reasonable price.