Morgan Stanley has downgraded Salesforce from overweight to equal-weight and reduced its price target from $287 to $185, indicating only a 6% upside from the stock's recent closing price. The downgrade follows a nearly 4% drop in premarket trading after the announcement.
Analyst Adam Wood noted that while Salesforce is actively transforming its business with AI, specifically through its 'Agentforce' customer service bots and a recent $3 billion acquisition of AI platform Fin, these efforts have not yet translated into significant organic growth.
He pointed out that the company's legacy portfolio continues to hinder progress, and without a notable growth inflection, the stock is likely to remain range-bound. Year-to-date, Salesforce shares have declined 34%, reflecting broader investor concerns about the relevance of software services in an AI-driven market.
Despite Morgan Stanley's cautious stance, the majority of analysts covering Salesforce maintain a strong buy or buy rating, suggesting a divergence in market sentiment regarding the company's future performance