Salesforce (CRM) Upgraded, Price Target Remains Down From Here

Salesforce's stock price (NASDAQ:CRM) has fallen back 9.4% over the past month, continuing to underperform this year, with a decline of 29.42% YTD standing in stark contrast to S&P 500's 10% gain. An upgrade is usually cheered by bulls, yet today's note reveals a mixed outlook.

DA Davidson upgraded Salesforce to “Neutral,”from “Underperform”, maintaining a $225 price target. This upgrade comes even as the analyst acknowledges Salesforce's underperformance against the iShares Expanded Tech-Software Sector ETF (IGV), lagging by 27 points since fiscal Q1 results and 48 points year-to-date.

With Salesforce trading at $236.20 into today's open, the target reflects a decline of~$11 from the current price action.

The analyst believes the decline in market sentiment is “appropriate” given the challenges of slowing organic expansion and increased competition.

Adding another layer to the narrative, activist hedge fund Starboard Value has significantly increased its stake in Salesforce, upping its holdings by 47% this quarter to 1.3 million shares. This move suggests renewed pressure for strategic changes within the company, reminiscent of Starboard's previous involvement in 2022. The increased stake comes amid a nearly 30% decline in Salesforce's stock price since the turn of the year, potentially signaling an attempt to capitalize on perceived undervaluation and drive corporate reform.

Salesforce itself remains optimistic, having recently raised its fiscal 2026 revenue forecast to $41 billion – $41.3 billion, an increase from the previous $40.5 billion – $40.9 billion range. This positive outlook is fueled by robust enterprise cloud spending and the increasing monetization of its AI platform, Agentforce. The company's strategic focus on AI is further underscored by its collaboration with NVIDIA to develop advanced AI capabilities for the enterprise sector.