2 Reasons BMO Is Bullish On Salesforce

salesforce.com, inc. CRM could consistently perform ahead of expectations by offering an integrated set of cloud suites, BMO Capital Markets’ Keith Bachman said in a report. He initiated coverage of the company with an Outperform rating and a price target of $98.

Analyst Keith Bachman mentioned that saleforce.com could benefit from two scale issues:

1. By offering an integrated set of cloud suites: “More specifically, we think customers favor buying sales force automation, service, and marketing suites that are well integrated.”
2. The company’s scale provides brand, sales and cost advantages: Offering a competitive edge over other SaaS vendors.

Sales Cloud Growth

Bachman believes Sales Cloud would continue being the market leading SFA [sales force automation] application and expects Sales Cloud to grow 8-12 percent over the next three years. “Further, we believe Sales Cloud will be the market leader in absolute dollars terms, and will help lead to cross-selling of other saleforce.com products.”

Service Cloud To Be Largest Contributor

“The service market is the largest segment within the broader customer relationship market at about a $10 billion total addressable market (TAM),” the analyst wrote. He expects the market to grow 10-12 percent in constant currency terms to reach about $14 billion in 2018.

Salesforce.com’s Service Cloud has been the market leader, and could grow at nearly 30 percent y/y in FY17 and 25 percent y/y in FY18.