Investors Remain Concerned Salesforce Has Come Unglued

Canaccord Genuity said in a note on Wednesday investors remain concerned salesforce.com, inc. CRM has come unglued in terms of pursuing a large M&A deal.

Tuck-In Acquisitions Likely

Analyst Richard David believes there is no $4 billion plus targets that make immediate sense for the company to purchase. Although the analyst believes the company might make tuck-in acquisitions (smaller sub-$3 billion targets), he is of the view that the risk of seeing some sort of disruptive and dilutive large M&A transaction is quite low. Even the larger potential targets, according to the analyst, do not make a lot of sense.

Well-Positioned Short, Intermediate And Long Term

After analyzing competitive dynamics from Oracle Corporation ORCL and Microsoft Corporation MSFT and possible moves by Amazon.com, Inc. AMZN and Alphabet Inc GOOG GOOGL, Canaccord Genuity believes the company is well positioned for the short, intermediate and long term.

Dips Could Be Bought

The firm noted the stock may not have to contend with any hard news until the fourth-quarter results. However, the firm feels the stock could be impacted by market reactions to whatever emanates from Washington, D.C. The firm does not believe there is a danger of the stock revisiting the $50 levels it fell to during the nervous breakdown in February 2016. Going by the precedence of dips presenting buying opportunity in salesforce.com shares, the firm believes dip to the $67–$75 range could be a buying point.

Reiterating Rating, Price Target

Canaccord said it has no hesitation recommending the shares of salesforce.com at current levels, given that it is trading in the lower third of historical valuation over the past ten years. The firm continues to position the company as one of its top large-cap picks. The firm reiterated its Outperform rating and $95 price target for the shares of the company.

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