Salesforce.com (CRM) shares are up sharply on a new Wall Street analyst report that pegs it as the best tech investment in 2019.
The enterprise-software company's stock is up 6% to $138.30 after FBN Securities analyst Shebly Seyrafi said its revenue should grow 21% in fiscal 2020, propelling it toward its oft-stated goal of achieving $23 billion in sales by fiscal 2022. Seyrafi reiterated an Outperform rating with a price target of $180.
"Jokingly, some may believe that a better name for the company in the future is'ServiceForce' as this cloud becomes the largest cloud," Seyrafi said in a Friday note, predicting low-double-digit growth in cloud sales and 30% spikes in its marketing and platform cloud segments.
Moreover, Salesforce's status as a SaaS (software as a service) company makes it an attractive buy because it is less vulnerable to trade wars and slower growth in China, he added.
During its third-quarter earnings call in late November, the company raised revenue guidance for fiscal 2019 to $13.23 billion to $13.24 billion, and $15.9 billion to $16 billion for fiscal year 2020. If Salesforce achieves top-end growth in fiscal 2020, it would be the first enterprise-software company to reach $16 billion in revenue.
Salesforce has benefited from developments old and new, according to the note.
Since current co-CEO Keith Block joined Salesforce in 2013, the company's large-deal activity has grown significantly, according to Seyrafi. In its latest quarter, deals worth more than $1 million grew 46% year-over-year.
The May 2018 acquisition of MuleSoft, a provider of application program interfaces for building application networks, pumped $128 million into Salesforce's latest quarterly sales. Seyrafi expects MuleSoft, which was bought for $6.5 billion, to "turbocharge growth" and account for $533 million in cloud-related revenue in fiscal 2020.
Write to Jon Swartz at jonathan.swartz@dowjones.com
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
