Jim Cramer Thinks These 10 Stocks Deserve Your Attention

3. Salesforce.com Inc. (NYSE:CRM)

Number of Hedge Fund Investors: 117

Jim Cramer noted that Citi analysts are not impressed with Salesforce.com Inc. (NYSE:CRM)’s $1.9 billion acquisition of the data security startup Own. While the analysts acknowledge that the all-cash deal appears sensible as it helps minimize dilution for existing shareholders, they also hint that it might suggest Salesforce.com Inc. (NYSE:CRM)’s data analytics application still needs improvement.

“Salesforce’s $1.9 billion acquisition of data security startup Own does not wow analysts at Citi. While they said the all-cash deal looks responsible given Salesforce’s efforts to reduce dilution to existing shareholders, they also suggested it could indicate its data analytics application is still “a work in progress.” Citi’s neutral view on the deal echoes the market’s view on enterprise software overall. Not a much-loved group right now.”

In Q2 FY2024, Salesforce.com Inc. (NYSE:CRM) reported earnings per share (EPS) of $2.12, exceeding the $1.90 estimate, and revenue rose 11% year-over-year to $8.6 billion. This growth is driven by its cloud services and new AI initiatives, including the Agentforce AI platform. Salesforce.com Inc. (NYSE:CRM) also achieved a record operating margin of 33.7% and raised its full-year guidance, strengthening its position as a leader in AI-driven CRM solutions.

Analysts have increased their price targets for Salesforce.com Inc. (NYSE:CRM), ranging from $265 to $350, indicating a potential upside of 20-40% from current levels. With ongoing investments in AI, including its integration of Einstein and Slack, and favorable market conditions, Salesforce.com Inc. (NYSE:CRM) offers an attractive long-term investment opportunity.

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

“Salesforce, Inc. (NYSE:CRM) is the largest pure-play cloud software company, holding a leading market share in customer relationship management applications and a top-five market share position in the company’s other clouds (Marketing, Service, Platform, Analytics, Integration, and Commerce). The company’s software subscription term-license model differs from the traditional perpetual-license software model in two respects: (1) the software is hosted on centralized servers and delivered over the internet, as opposed to traditional enterprise software that is loaded directly onto customers’ hard drives or servers; and (2) the revenue model is subscription-based, typically charging monthly fees per user as opposed to charging one-time licensing fees. The stock’s weak relative performance followed its fiscal first quarter earnings announcement, where the company missed top-line and cRPO (current remaining performance obligations) estimates while also issuing weak forward guidance.”