Salesforce stock downgraded at Morgan Stanley on lack of near-term catalysts

Salesforce (NYSE:) shares fell almost 2% in early Monday trading after Morgan Stanley analysts downgraded the rating to Equal Weight from Overweight, citing a lack of near-term catalysts.

Still, the price target is hiked to $278 per share, signaling a further upside in the CRM stock.

“While confident in Salesforce’s longer-term opportunity to further penetrate large enterprises with more vertically oriented solutions, near-term catalysts, including margin expansion and price increases, are now in rear-view mirror,” analysts wrote in a note.

While Generative AI could act as the next catalyst for CRM stock to re-rate higher, analysts don’t see it happening in the short term.

“With regard to Generative AI announcements, limited access to Unlimited tiers in Sales and Service Clouds, as well as, uncertainty on access, capabilities and pricing of consumption credits (which are expected to be the more significant driver on GenAI-related growth vs. seatbased uplifts), keeps us from crediting the company more fully with near-term benefits,” analysts added.

While valuation remains attractive, the stock is likely to stay in the penalty box as “incremental catalysts to support a re-rating of the multiple will take time to play out, in our view.”

Salesforce stock is up 70% this year.