Salesforce stock analysis before earnings, Informatica buyout rumors

Salesforce stock price has sold off this year as investors watch its investments in artificial intelligence and its rumoured talks to acquire Informatica. CRM dropped to $273 last week, down by 25% from its highest point this year, meaning that it is in a deep bear market. 

Salesforce in talks to buy Informatica

The main catalyst for the CRM stock is a report by the Wall Street Journal that the company was considering buying Informatica, which helps companies manage their data in the cloud and on-premises.

WSJ wrote that the deal could be announced as soon as Salesforce publishes its financial results this week. It would be a sizable deal since Informatica has a market capitalization of over $6.8 billion. 

Salesforce has a history of executing large transactions. It acquired Slack in a $28 billion deal that some of its management regretted afterwards. 

Salesforce bought Tableau for $15.7 billion, Mulesoft for $6.5 billion, and Demandware for $2.8 billion. It also bought ExactTarget, ClickSoftware, Quip, Datorama, and many other companies. 

Salesforce believes these services help grow its ecosystem and serve its clients better. For example, its Tableau acquisition made it the biggest company in the business intelligence industry after Microsoft. Its buyout of Slack made it a big name in corporate communications, where it has almost 20% market share. 

However, some analysts, including Third Point and Starboard, have questioned the approach, saying that Salesforce would do better buying back its stock. 

Salesforce earnings ahead

The next key catalyst for the Salesforce stock price will be its earnings, which are scheduled on Wednesday.

These numbers will provide more information on whether the company’s AI solutions like AgentForce, are leading to higher sales. 

The most recent results showed that its revenue rose from $9.2 billion in Q4’24 to $9.99 billion in Q4’25. This growth was driven by its subscription and support business, which made over $9.45 billion. It generated a net profit of $1.7 billion, an increase from the previous $1.65 billion.

Salesforce issued a forward revenue guidance of between $40.5 billion and $40.9 billion this year.

The average estimate by analysts is that Salesforce’s revenue will come in at $9.75 billion, up by 6.75% from the same quarter last year. They also expect the earnings per share to come in at $2.55, up from the previous $2.44. While Salesforce has missed its earnings in the past, there is a likelihood that it will do better than estimates. 

There are signs that Salesforce is a bit overvalued using the rule of 40 approach. It has a revenue growth of about 8% and an operating margin of 21.6%, giving it a rule-of-40 figure of 29%. Its net profit margin is 16%, bringing the rule-of-40 figure to 24%. 

Salesforce stock price technical analysis

The daily chart shows that the CRM stock price formed a double-top pattern at $366 earlier this year. It then crashed below the neckline at $313 on January 13.

The stock has plunged below the 38.2% Fibonacci Retracement level and the 50-day and 100-day Exponential Moving Averages. 

Therefore, the most likely scenario is where the Salesforce stock price continues its downtrend after earnings. If this happens, the next point to watch will be at the April low of $230, down by 16% from the current level. A move above the resistance at $295 will invalidate the bearish view.