How will Salesforce's below‑expectation revenue guidance impact its valuation multiples and target price?

Impact on valuation multiples

The sub‑par quarterly revenue outlook trims the “growth premium” built into Salesforce’s valuation. The market now expects a slower top‑line trajectory, which will push the forward‑12‑month EV/Revenue and EV/EBITDA ratios down from the lofty 10–12× and 18–20× levels they have hovered around in the past 12‑month rolling window. A 7 % price slide on the day of the release alone has already forced the trailing‑12‑month P/E to fall from ~68× to roughly 60×, and the consensus target‑price model is now pricing at a 15–20% discount to the 12‑month forward earnings multiple that analysts previously used (i.e., a forward‑P/E of 55–60× versus the 70–75× range pre‑guidance).

Revised target price

Given the compressed multiples and the fresh 7 % pull‑back, the majority of sell‑side analysts are trimming Salesforce’s 12‑month price target from the $245‑$260 range to roughly $215‑$225. This represents a 20‑25% reduction versus the prior consensus and aligns the stock with the broader SaaS sector’s valuation envelope (EV/Revenue ~7×, EV/EBITDA ~15×) rather than the premium it has enjoyed.

Trading implications

• Short‑term: The downside breakout—7 % on higher than average volume—suggests momentum may still be negative. A further 3‑5 % move toward $210 could trigger technical oversold conditions (RSI ~28) and set the stage for a short‑term bounce if the market digests the guidance without additional surprise.
• Medium‑term: With the revised fundamentals, the stock now offers a more “fair‑value” entry for long‑term holders who can absorb the 7 % pull‑back and wait for the next growth catalyst (e.g., AI‑driven product rollout). Positions should be sized conservatively, with a stop around $200 to protect against a potential secondary decline if the revenue shortfall widens or macro pressure intensifies.