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Piper Sandler analyst Brent Bracelin upgraded Salesforce (CRM) to Overweight from Neutral with a price target of $365, up from $280.

The analyst says in-person conversations with new leadership over the last two days give him confidence that Salesforce should see a "multi-year period of multiple and profit expansion tied to operating discipline and organic investments that can sustain growth."

Despite the 7% rally after the fiscal 2023 guide up yesterday, Salesforce has an estimated 2023 enterprise value to sales ratio of 7.5 times versus Microsoft (MSFT) at 9.3 times and Adobe (ADBE) at 14 times, in part, because it has emphasized growth over margins for the past decade, says the analyst. Bracelin believes the company's new team, new model, and new post-Covid reality point to a "structural change" that could result in a material boost to profits as it scales revenue to $50B-plus.