Market Overview

3 Reasons This Analyst Likes Salesforce

3 Reasons This Analyst Likes Salesforce

Investors are concerned about, inc.'s (NYSE: CRM) stagnant margins, M&A dilution and decelerating organic growth. But Morgan Stanley sees a path to double revenues by 2023.

The Rating

Morgan Stanley analysts Keith Weiss and Stan Zlotsky maintained an Overweight rating on Salesforce with a $180 price target.

The Thesis

The analysts expect Salesforce to continue expanding its empire in the long term.

“With our partner checks indicating favorable competitive positioning and healthy customer demand trends across Salesforce's product portfolio, and enterprise IT spend focused on digital transformation, Salesforce remains one of the best secularly positioned names in software and a long-term share gainer within an estimated $200B+ Total Addressable Market (TAM),” Weiss and Zlotsky wrote in a note.

They suspect investors will share their optimism if management addresses three points in the upcoming Investor Day presentation.

The first is the “durability of 20%+ organic revenue growth in the face of an uncertain macro environment, large and maturing solution segments (e.g. SFA) and highly competitive end markets.” Demand for Marketing, Service Cloud and Mulesoft are expected to drive such growth.

The second factor is the company’s potential to sustain meaningful operating margin expansion after attending to recent acquisition costs. Morgan Stanley expects a convergence in Tableau and Salesforce margins next year, with synergies manifesting by 2021.

The third factor is Salesforce’s M&A strategy — a major concern for margin-conscious investors.

“We expect the pace of large M&A is likely to slow down into FY21,as management focuses on harvesting acquisitions made this year,” the analysts wrote. “However, we think a further pullback in broader software valuations could lead to an increased M&A appetite,as Salesforce attempts to acquire strategic assets at an attractive price.”

Price Action

At time for publication, Salesforce shares traded up marginally around $163.

Related Links:

Large Salesforce Option Traders Betting On A Bullish Bounce

Morgan Stanley Sifts Through Software Sector, Flags 'Picks,' 'Holds'

Latest Ratings for CRM

Nov 2020KeyBancInitiates Coverage OnOverweight
Nov 2020SMBC NikkoInitiates Coverage OnOutperform
Nov 2020Morgan StanleyDowngradesOverweightEqual-Weight

View More Analyst Ratings for CRM
View the Latest Analyst Ratings


Related Articles (CRM)

View Comments and Join the Discussion!

Posted-In: Keith Weiss Morgan Stanley Stan ZlotskyAnalyst Color Price Target Reiteration Analyst Ratings Best of Benzinga

Latest Ratings

OCXBTIGInitiates Coverage On5.0
GCMGWilliam BlairInitiates Coverage On
PDCraig-HallumInitiates Coverage On41.0
CAPLWells FargoDowngrades
MMPWells FargoDowngrades
View the Latest Analytics Ratings
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Premarket Activity
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Fintech Focus
A daily collection of all things fintech, interesting developments and market updates.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at