Asset Watch
Thursday, January 16, 2025
Volatility continues to permeate as traders react to every macroeconomic data release. And while it may take time for investors’ fundamental anxiety to calm down, the technicals often provide solid entry points before the fundamental ‘all-clear.’
As a result, does Salesforce deserve your attention right now?
Needham analysts increased their Salesforce price target to $400 on Jan. 8, telling clients, “CRM is our 2025 top pick in our Enterprise Software universe.”
“AI-focused sales rep hiring is moving fast, which should aid 2H bookings, [and with the] Halo effect becoming real, Mulesoft likely benefits more than other CRM products.”
Add it all up, and “CRM shares currently trade at 24x FY26 consensus [free cash flow] estimates of $13.3B, representing 13.5% y/y FCF growth.”
Another potential upside catalyst is Salesforce’s retest of the weekly breakout. If you analyse the horizontal white line, you can see that Salesforce easily cleared resistance from its November 2021 and February 2024 highs.
Yet, the sharp overshoot led to five straight weekly declines, en route to retesting the breakout. However, Salesforce has produced a nice green candle this week, and if it holds, it could be a sign that a bottom is in or near.
A secondary indicator is the 20-week moving average. The blue line on the right side of the chart sits slightly below the breakout level and could provide backup support if another sell-off occurs.
The 20-week MA should keep rising and may act as a powerful floor when combined with price support from the November 2021 and February 2024 highs.
Because the week isn’t over, it’s wise to wait for confirmation before entering a position. If Salesforce holds the $312 area and maintains the strength into next week, the risk-reward becomes more attractive for the bulls.
In the meantime, continue to eye the key breakout zone, and watch for weaker economic data that may reduce investors’ interest rate fears and enhance sentiment for stocks.