salesforce.com (CRM) PT Raised to $300 at Guggenheim

Guggenheim analyst John DiFucci raised the price target on salesforce.com (NYSE: CRM) to $300.00 (from $270.00) while maintaining a Buy rating.

The analyst commented: "We attended Dreamforce, and came away with similar thoughts around risk that we had going in, but a more open view of what could be. We have written extensively about AI representing a technology paradigm shift and how leaders of previous paradigms are not typically the leaders of the next, BUT that AI would not likely be a fatal death knell to traditional Software. See our notes “AI: Still Early, But Not Too Early” and “The Fatal AI Bear Case on Software Is … A Hallucination”. We believe that traditional Software companies will have to embrace AI to remain relevant, and even then, it could still stall any climb in relevance, though how each company deals with this is also important. We’ve always been impressed with the gusto that CRM has embraced AI, but it seems to us that it is now taking a more logical approach to product and pricing, though it remains early in the market development of both, with broad enterprise adoption yet to come. We enjoyed CEO Marc Benioff’s Q&A session - he shared what he thought (rather than what he thought others wanted to hear) about a concept that will be a defining moment of his storied legacy. CRM is no longer the disruptor at the onset of a new paradigm, but it’s the leader of the previous one. We believe Salesforce's approach is the right one - that it's imperative that it is the AI leader in CRM before expanding beyond. We agree that traditional Software has staying power, and expect organically accelerating Subs in F2H will send the stock higher. But furthering a climb in relevance will require extensive effort against material risk and will require CRM to enact its own RenaiSaaS. That call doesn’t need to be made now with the stock at 5.4x EV/Rec Rev (see “What Price is Right?”). Regardless, CRM seems to be doing all that it can to leverage this immense change. Time will tell whether it’s enough. We remain Buy and are raising our Price Target to $300 from $270 based on less conservative estimates in the out-years."

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