Salesforce's Well-Structured Operations Taking A Back Seat In The Market's Mind To Twitter Talk

Although salesforce.com, inc’s CRM Analyst Day offered “a measured and insightful view into a well-structured operational strategy,” reports of a potential bid for Twitter Inc TWTR “threw cold water on what had been warming investor sentiment."

CLSA's Ed Maguire has a Buy rating on Salesforce, with a price target of $101

During the Analyst Day, management highlighted there has been no change in Salesforce’s financial framework and that the company continued to be committed to its longer-term operating margin expansion target of 100-300bps per annum, with 20-30 percent growth.

Investor Concerns

After Tuesday's market close, a Wall Street Journal report mentioned a potential bid by Salesforce this week for Twitter, triggering investor concern. The report also cited Alphabet Inc GOOGL and Walt Disney Co DIS as the other potential bidders.

“Salesforce’s M&A strategy remains the big variable for investors, and overhang on the stock…Based on conversations with the investors we’ve spoken with, investor sentiment regarding a potential deal is near universally opposed. We concur,” Maguire commented.

Salesforce’s strong fundamentals remain intact, the company has a “disciplined approach to profitability” and maintains a balance between M&A and organic investments, the analyst added.

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