Salesforce (NYSE: CRM) is navigating a challenging landscape as it approaches its Q4 FY2026 earnings report on February 25. The company’s stock has experienced a significant decline of 30.1% year-to-date, closing at $185.16 as of last Friday. In a move that alarmed investors, three major Wall Street firms reduced their price targets on Salesforce, raising questions about the stock’s future trajectory.
Barclays cut its price target from $338 to $265, while maintaining an Overweight rating. Evercore ISI lowered its target from $340 to $260, still rating it as Outperform. Jefferies also made cuts, reducing its target from $375 to $250 and still assigning a Buy rating. Likewise, Mizuho decreased its target from $340 to $280, preserving an Outperform rating but citing concerns over broad AI disruption affecting enterprise software. Other firms, including BMO Capital, Citigroup, and UBS, have followed suit with their own target adjustments in the previous week.
The financial results of Salesforce present a mixed picture. For the third quarter, the company reported a net income increase of 36.61%, amounting to $2.09 billion, although revenue growth was more modest at 9%, totaling $10.26 billion. Notably, the company’s Agentforce segment achieved an annual recurring revenue (ARR) of nearly $1.4 billion, showcasing an impressive year-over-year growth rate of 114%. Additionally, Salesforce returned $4.2 billion to shareholders during Q3, indicating a commitment to rewarding investors despite market fluctuations.
Investor sentiment appears to be shifting, with analysts noting a bearish outlook reflected in Reddit sentiment scores dropping to 28 out of 100. However, these same analysts maintain that the company still possesses significant upside potential, estimating gains of 35% to 50% from current prices. The upcoming earnings report will be pivotal, as it could demonstrate whether the momentum from Agentforce can rejuvenate Salesforce’s growth narrative or reinforce existing market skepticism.
Overall, while Salesforce faces hurdles from its stock performance and competitive pressures within the AI sector, its strong earnings and continued shareholder returns signify resilience and the potential for recovery. The company’s ability to not only adapt to its rapidly evolving sector but also to deliver substantial returns to investors could reflect positively in its upcoming results, reinforcing confidence among stakeholders.