'Things Are Good' At Salesforce, Notable Source Tells Deutsche Bank Analyst

• salesforce.com, inc CRM shares are down 25 percent since January 4, and are trading near their 52-week low of $57.75.
• Deutsche Bank’s Karl Keirstead maintained a Buy rating for the company, with a price target of $90.
• Investors are expected to continue investing in Salesforce for its industry leading position and sound fundamentals, Keirstead stated.

Analyst Karl Keirstead mentioned that although the recent pullback in growth software stocks may continue in the near future, the 13 percent correction in salesforce’s shares is temporary. He believes that investors would invest again in Salesforce, given its strong fundamentals, rising margins and leading position in the Cloud segment.

Market checks revealed that “things are good” at Salesforce, with strong 4QF16 deal momentum with Service Cloud selling well. “On the sales rep front, we heard that the move to a greater vertical emphasis is well underway but that attrition among Salesforce’s midmarket reps is “still relatively high” (but not increasing),” Keirstead mentioned.

Large enterprise CIO checks indicate an increase in spend on customer facing technology in 2016.

Salesforce has disclosed a 10-20 percent increase in the per-user-per-month price points for the 3 editions of the new Sales Cloud and Service Cloud platform. The company is also raising the prices for recently-acquired SteelBrick by 30-75 percent.

“While there may be an element of re-packaging that distorts an apples-to-apples comparison, and while the new Lightning price points only impact new customers starting in 2QF16, prices are trending UP and we doubt that Salesforce would do this if demand was weakening or if competitive pressures were rising/serious,” Keirstead wrote.