Salesforce's 'Magic Of 30' Is Alive, BofA Says

In a report published Thursday, BofA Merrill Lynch analysts maintained a Buy rating on

, with a price target of $80, after the company's 1Q results reflected solid growth and margin expansion. The revenue, billings and EPS estimates for FY16 have been raised from $6.504bn to $6.542bn, from $7.349bn to $7.402bn and from $0.68 to $0.70, respectively. In the report BofA Merrill Lynch noted, "We don't think the new analytics product is factored in aggressively for FY16 and could lead to more revs upside. Wave is aimed for the mass user with simple and intuitive visualizations and feels like next generation Tableau. We expect Wave to evolve over time as an enterprise-wide BI platform to vie for a bigger stake in the analytics market." Replacement cycle of customer support systems market, which is estimated to be roughly $10bn, could boost growth for several years, given that Salesforce.com and

together have a penetration of less than 20 percent. While Salesforce.com is likely to take 9-10 years to generate revenue of $20bn, it could take

17 years and

14 years to achieve the same. "Based on both our top-down and bottom-up analyses, $20bn seems achievable with the current TAM," the analysts added. "While M&A potential could set a floor for the stock, we think investors should start focusing on fundamentals and the march towards $10bn in revenues and beyond and the potential margin implications," the analysts commented.