Stock price already down 37%...Wall Street veteran: "Salesforce (CRM) is still expensive"

▲ Salesforce (CRM), Bear Market / AI Generated Image

Salesforce (CRM), which has fallen 37% this year, received a Wall Street warning that there are insufficient reasons to buy it, despite its seemingly cheap stock price. As questions grow surrounding the business performance of its core artificial intelligence (AI) product, Agentforce, it is pointed out that its undervalued appeal is merely an illusion.

According to the U.S. economic news outlet MarketWatch on July 9 (local time), KeyBanc Capital Markets analyst Jackson Ader downgraded Salesforce's investment rating from Overweight to Sector Weight. Ader stated, "Excluding valuation multiples, there is little basis for an optimistic recommendation on the stock," adding, "When that's the case, it's time to step back."

Salesforce's enterprise value-to-free cash flow multiple is about 80% lower than its peak since 2020. While this is lower than comparable software companies, the situation changes when growth rates are reflected, according to the analysis. Ader pointed out that although Salesforce's stock price appears cheap by historical standards, it is at an average level compared to peers, and considering growth rates, it is actually higher than competitors.

The evaluation of its AI business was also cold. After attending Salesforce partner and customer events, Ader concluded that enterprise customer data was not organized enough to perform large-scale AI tasks. Regarding Agentforce, he commented, "The product is not yet fully ready." He explained that partners are just beginning to convert Agentforce proof-of-concepts into actual contract candidates.

A survey of Chief Information Officers (CIOs) also presents a burden. More CIOs responded that they would lower Salesforce's IT budget priority over the next 12 months than those who would raise it. Ader assessed that while some business growth might accelerate, it is already a well-known factor in the market. He stated, "A larger or longer acceleration of growth is needed to drive stock price increases, but that seems unlikely in 2026."

Salesforce's stock price has dropped 37% this year, and it slid more than 4% in pre-market trading on the 9th, when the news of the rating downgrade was reported. KeyBanc judged that it was difficult to maintain a buy recommendation based solely on the lowered valuation, and Salesforce did not immediately respond to MarketWatch's request for comment.

[Article Key Summary]

-KeyBanc downgraded Salesforce's investment rating from Overweight to Sector Weight, stating that there is insufficient basis for stock price appreciation beyond undervaluation.

-Salesforce's enterprise value-to-free cash flow multiple is about 80% lower than its peak since 2020, but an analysis shows it is higher than comparable companies when growth rates are reflected.

-Amid questions raised about Agentforce's business performance and the readiness of customer data, Salesforce's stock price has fallen 37% this year.

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