While its overall gains in 2024 are nothing to scoff at, Salesforce (NYSE: CRM) stock made its biggest moves of the year in the extended session between Tuesday, December 3, and Wednesday, December 4.
Specifically, after an overall year-to-date (YTD) climb of 29.40% and after gaining 0.13% in the last session to close at $331.43, CRM shares rocketed 12.54% after the closing bell. Should this trend persist and the stock remains near its press time price of $373, Salesforce will open a full 45.63% in the green YTD.
The massive moves can be attributed to the software giant’s latest earnings report, published on the evening of December 3, that, despite underperforming with guidance, seemingly more than satisfied investors with having beaten revenue forecast.
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Why CRM shares are rocketing today
Indeed, Salesforce recorded a revenue of $9.44 billion – approximately 1% better than the expected $9.35 billion – and saw its operating margins rise to 20% from the 17.2% in the third quarter (Q3) of 2023.
Similarly, the firm’s free cash flow margin rocketed from 8.1% in Q2 2024 to 18.8% in the most recent quarter.
Not all of the figures, however, proved as strong. Salesforce missed the earnings-per-share (EPS) forecasts of $2.45, instead reporting $2.41, and its guidance came in at $10 billion for Q4, slightly less than the consensus of $10.05 billion.
Still, as evidenced by the extended session trading, investors were far more pleased with the positive aspects of the earnings than concerned with the misses.
Analysts revise Salesforce stock ratings after earnings
A similar situation can be observed among the analysts who were the first to react to the report.
Jefferies welcomed the publication by maintaining its ‘buy’ rating for CRM stock and raising its price target from $400 to $425 – a 28.23% upside from the latest close and a 13.93% upside from Salesforce shares’ press time price.
Still, though Jefferies’ overall reaction was evidently positive, it cautioned us about the relatively weak growth of the recently acquired business – admittedly, a troubled aspect for some time – and a slowdown in profit margin improvement.
In September 2024, Salesforce acquired Tenyx, Own, and Zoomin Software, and in August, it finalized the first of the four acquisitions of the year: PredictSpring.
Finally, though Wedbush’s revision predates the report, it is worth pointing out that the tech analyst Dan Ives identified CRM stock as one of the likely big winners in 2025 when he opined that software will be the big beneficiary of next year’s phase of the artificial intelligence (AI) boom.
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