3 Steps For Salesforce To 'Get Its Mojo Back,' Says Analyst

Salesforce.com, inc. (NYSE: CRM) is well-positioned to benefit from accelerating digital transformation demand, while the management’s more constructive margin commentary and the recent stock sell-off make the risk-reward significantly more favorable, according to Morgan Stanley.

The salesforce Analyst: Keith Weiss upgraded the rating for salesforce from Equal Weight to Overweight, while keeping the price target unchanged at $270.

The salesforce Thesis: “While concerns on M&A appetite and durable margin expansion may linger, leading franchises do not stay cheap for long, particularly amidst the strong demand backdrop we foresee over the next several years,” Weiss said in the upgrade note.

The analyst noted three steps for salesforce to regain its mojo:

• Core portfolio benefiting from the recovery this year: The company has a broad portfolio encompassing the complete view of the customer positions salesforce well for “the top CIO priorities in 2021, including Digital Transformation, Cloud, Customer Experience, eCommerce, and Agility/Low-Code,” he wrote.
• Proof of the rationale behind the acquisition of Slack: Slack’s performance has improved over the past couple of quarters, “proving to be a better asset than many originally thought,” Weiss noted.
• An improved margin outlook: The ex-M&A margin expansion “suggests greater operational efficiency coming out of Covid,” he said.

CRM Price Action: Shares of salesforce had risen by 2.23% to $219.11 at the time of publication Wednesday.

(Photo: salesforce)