10 Best Enterprise Software Stocks to Buy Now

06. Salesforce, Inc. (NYSE:CRM)

Average Analyst Share Price Target Upside: 11.38%

Average Analyst Share Price Target: $292.79

Salesforce, Inc. (NYSE:CRM), a leading player in the cloud computing industry, stands at number six on our list of ten best enterprise software stocks to buy right now. On August 16, BofA Securities raised its price target for Salesforce, Inc. (NYSE:CRM), from $288.00 to $316.00, while maintaining a Buy rating. Analysts believe the company’s strong free cash flow (FCF) growth justifies the optimism. Although revenue growth is projected to slow from 11% to 9% in fiscal 2025, Salesforce, Inc. (NYSE:CRM) is still expected to post a 25% FCF increase, driven by 22.5% growth in operating cash flow. Analysts also see potential productivity gains in sales and marketing boosting margins further. The new price target reflects a 22x multiple on estimated fiscal 2025 FCF, up from 16x previously. Salesforce, Inc. (NYSE:CRM) leadership in artificial intelligence (AI) is anticipated to provide a revenue boost. The company’s Data Cloud platform, integral to its AI strategy, continues to see strong adoption, with over 1,000 new customers in Q1. Salesforce, Inc. (NYSE:CRM) robust financials, including a 43% year-over-year increase in free cash flow to $6.1 billion, further solidify its position as a compelling long-term investment. The consensus among analysts remains optimistic, with a median price target of $292.79, suggesting a potential upside of over 11%.

Polen Focus Growth Strategy stated the following regarding Salesforce, Inc. (NYSE:CRM) in its Q2 2024 investor letter:

“Salesforce, Inc. (NYSE:CRM) declined nearly 20% due to a slowdown in revenue and bookings growth, part of a wider trend we’ve observed across enterprise software as companies defer spending on large projects given the uncertain macroeconomic environment. As mentioned, there has been an emerging narrative about prioritized spending on AI, cloud, and security over enterprise software spending that could eventually impair seat-based software over the longer term. Though there may be some near-term shifts in dollars toward GenAI, we believe the market for mission-critical enterprise software will remain robust well into the future. We will monitor the position closely, but we continue to believe that Salesforce is well-placed with its mission-critical software and high customer retention rates to weather these headwinds, lean on pricing power, and effectively monetize generative AI in its product suite.”