Salesforce stock chart points to a dive despite the $5.6 billion Army deal

Salesforce’s stock price has crawled back in the past few days after the company received a major deal from the US Army. CRM rose to $230, up slightly from the year-to-date low of $220. It remains ~38% below its highest point in December 2024.

Salesforce scores big US Army contract

Salesforce, the giant company in the software industry, scored a major win after securing a $5.6 billion contract from the US Army. The ten-year contract will see the company bring its tools, including Slack, to the Department of War.

The deal comes as Salesforce and other large software companies like Intuit, ServiceNow, and Adobe have come under intense pressure amid the ongoing AI disruption. Most of these stocks have plunged, with the State Street Software and Services ETF (XSW) falling to $180, down by over 12% from its highest point last year.

Salesforce stock remains in a bear market as investors remain concerned about its growth trajectory, as AI targets some of its products and services. Also, there are lingering concerns that its AI agents will take time to generate meaningful revenue contributions.

Additionally, some investors are concerned about its growth through acquisitions approach. It recently announced a deal to acquire Informatica for $8 billion. Its goal is to strengthen its AI and data management capabilities. 

Salesforce has executed more buyouts over the years, with the most notable ones being Slack, Mulesoft, Tableau, ExactTarget, Demandware, and Quip.

The most recent results showed that Salesforce’s revenue rose by 9% in the third quarter to $10.3 billion. Its remaining performance obligation (RPO) rose by 12% to $59.5 billion, while its operating margin was 21.3%.

Salesforce earnings preview

Analysts believe that the fourth quarter revenue rose by 11% to $11.1 billion, while its earnings per share (EPS) moved from $2.78 to $3.0. Salesforce has always been a highly conservative company when making its forward guidance. As such, its real performance will likely be much better than these expectations.

If the forecasts are accurate, then Salesforce’s annual revenue will be $41.48 billion, up by 9.4% YoY. Analysts also expect that its annual revenue will grow by 10.8% this year to $48.9 billion. The final figure will be better than this because of the new Army deal.

There are signs that the Salesforce’s has become an undervalued company. Data compiled by Yahoo Finance shows that it has a forward P/E ratio of 17, much lower than 26.11, where it was in 2024. The enterprise value to EBITDA also moved from 26.28 to the current 17.5.

Salesforce stock price technical analysis 

The weekly chart shows that the CRM stock price has crashed in the past few years, moving from a high of $366 in 2024 to the current $230. It has dropped below the 50-week Exponential Moving Average and the Supertrend indicator.

The stock has also formed a head-and-shoulders pattern and is now hovering at its neckline. Therefore, the most likely CRM stock forecast is bearish, with the next key target level being the psychological point at $200.

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