{"id":35033,"date":"2023-07-13T06:41:50","date_gmt":"2023-07-13T10:41:50","guid":{"rendered":"https:\/\/ifintechworld.com\/uncategorized\/analysts-hike-salesforce-stock-targets-after-rare-price-hikes\/"},"modified":"2023-07-13T06:41:51","modified_gmt":"2023-07-13T10:41:51","slug":"analysts-hike-salesforce-stock-targets-after-rare-price-hikes","status":"publish","type":"post","link":"https:\/\/ifintechworld.com\/?p=35033","title":{"rendered":"Analysts hike Salesforce stock targets after rare price hikes"},"content":{"rendered":"
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\u00a9 Reuters Salesforce (CRM) plans to raise prices by 9%, shares climb<\/span>
\n<\/i>\n<\/div>\n

Shares of customer relations management company Salesforce (NYSE:) closed nearly 4% higher on Tuesday after it announced a plan to increase prices beginning in August.<\/p>\n

In a statement published on its website, Salesforce said it will be increasing list prices by an average of 9% across Sales Cloud, Service Cloud, Marketing Cloud, Industries, and Tableau.\u00a0<\/p>\n

\u201cSalesforce\u2019s last list price increase was seven years ago, and since then the company has delivered 22 new releases, thousands of new features\u2014including recent generative AI innovations\u2014and invested more than $20 billion in research and development,\u201d the company said in an announcement discussing the changes.<\/p>\n

The cost of Professional Edition will increase by $5 to $80, Enterprise Edition will increase by $15 to $165, and Unlimited Edition will now cost $330, up $30.<\/p>\n

In the view of analysts at Evercore ISI, the price hike is reasonable and could provide a potential tailwind for earnings.<\/p>\n

“While there will clearly be some complaints from customers about the price increase, after a 7-year hiatus, we believe that a 9% increase is pretty reasonable given that other SaaS companies have passed through annual increases in the 4-5% range,” analysts wrote in a note to clients.<\/p>\n

They added, “Clearly, for big customers and customers adding new modules, we expect the net impact will not be anywhere near 9%, but we expect these price actions could provide a bit of a tailwind for CRM into 2H FY24 and 1H FY25.”<\/p>\n

Needham & Company analysts hiked the price target on CRM stock by $20 to $250 per share as new prices offer an “opportunity for top and bottom line benefit.”<\/p>\n

“We conducted a quick analysis to evaluate the potential incremental revenue and earnings uplift from this new pricing, and concluded that there is the potential for $229mm of revenue uplift in the first 12 months (4Q24 – 3Q25) and given there will be minimal costs tied to this additional revenue, EPS could increase $0.16 or a 2% uplift from our $8.01 estimate for this 12-month period. We estimate the full annualized impact (because 4Q24-3Q25 does not have a full year revenue impact) could approximate rev\/EPS of $366mm\/$0.26. The $0.26\/share increment to annual EPS is 3.2% of our estimate and in line with yesterday’s 3.9% share move,” they said in a client note.<\/p>\n

Similarly, BofA analysts estimate that the new prices will yield a 1-2% tailwind to cRPO as early as the second half of this year.<\/p>\n

(Additional reporting by Senad Karaahmetovic)<\/p>\n<\/div>\n

Read the full article here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

\u00a9 Reuters Salesforce (CRM) plans to raise prices by 9%, shares climb Shares of customer relations management company Salesforce (NYSE:) closed nearly 4% higher on Tuesday after it announced a plan to increase prices beginning in August. 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