Morgan Stanley sees 'a compelling catalyst' for Salesforce stock rally
The firm reiterated its Overweight rating on Salesforce (NYSE:CRM) in a note Thursday, citing untapped upside potential in the company's subscription revenue trajectory through fiscal 2028.
'Pricing & Packaging (NYSE:PKG) remains a compelling catalyst for growth acceleration to re-rate shares,' Morgan Stanley wrote in a note, following meetings with Salesforce management.
The firm said it walked away with 'a clearer view of the prospect for topline re-acceleration,' driven in large part by strategic price increases and bundled offerings.
While list price increases on the Enterprise and Unlimited tiers of Sales and Service Cloud are expected to contribute 'modest tailwinds' of 60 basis points and 50 basis points to fiscal 2027 and 2028 subscription revenue growth, Morgan Stanley sees a bigger opportunity in customer upgrades.
'The increased list prices going into effect in August 2025 represent a strategic effort, meant to push adoption of Premium tiers given incremental bundled value,' the analysts noted.
Using Sales Cloud as a benchmark, the bank estimates that customers can achieve ~70% cost savings when adopting Unlimited Edition bundles versus standalone features, and over 100% cost savings with the Agentforce 1 tier versus Unlimited on a like-for-like basis.
Morgan Stanley believes these price moves will incentivize large customers to migrate to higher-tier plans, particularly as those bundles include high-value tools like Data Cloud and Agentforce.
'Valuation remains undemanding,' the analysts added, with Salesforce trading at ~17x EV/2026 FCF versus a ~33x average for large-cap peers. They concluded: 'Innovative Pricing/Packaging strategies driving upgrade activity should prove a compelling catalyst for inflecting growth higher.'
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