Morgan Stanley: Salesforce, Inc. (CRM.US) opens up accelerated growth path, maintains "hold" rating.

Morgan Stanley released a research report, maintaining a "hold" rating on Salesforce, Inc. (CRM.US) with a target price of $404. After discussions with executives, Morgan Stanley highlighted investors' focus on the potential for Salesforce, Inc. to achieve 11% to 13% growth, with profit margins being a secondary factor. Management discussed various aspects such as new innovations, pricing and packaging, and booking dynamics, enhancing confidence in better growth in the future. Morgan Stanley pointed out that Salesforce, Inc. is currently laying the foundation for growth. Last week, Mike Spencer, CFO and Head of Investor Relations at Salesforce, Inc., was invited to London by Morgan Stanley, where discussions centered around whether Salesforce, Inc. could achieve 11% to 13% growth (2026 fiscal year subscription revenue growth target is 9%) and any discrepancies between this target and the current one. While investors believe that revenue growth accelerating to double digits will lead to a significant revaluation of the stock, concerns about institutional positioning, shifts in competitive dynamics, uneven performance in the solution portfolio, and executive changes continue to make investors cautious. However, there lies an opportunity in this, as management detailed various aspects of the Salesforce, Inc. story that, when combined, pave the way for accelerated growth in the 2027 fiscal year. Despite emphasizing the importance of patience to investors once again, given its price-to-earnings ratio of 16 times (based on the company's 2026 cash flow) and over 50% potential upside (target price of $404), Morgan Stanley believes that Salesforce, Inc. stock is attractively positioned in terms of risk/reward at current levels and is worth investors' patience for accelerated growth in the 2027 fiscal year.