Loop Capital Upgrades Salesforce, Says Stock Fairly Reflects The Odds

Estimates for Salesforce.com, inc. CRM have been de-risked to reflect slowing large deal activity, while mid-sized deal activity has accelerated, according to Loop Capital.

The Salesforce Analyst: Yun Kim upgraded Salesforce from Sell to Hold and established a $225 price target.

The Salesforce Thesis: Checks indicate a slight recovery in the company’s core business, driven by higher mid-sized deal activity and continued strength in the Tableau and Mulesoft businesses, Kim said in the upgrade note.

The Street’s fiscal 2022 revenue estimate reflects 17% organic growth versus the annual organic revenue growth target of 20%, the analyst said.

The latest checks “with large global system integrators indicate that overall business activity has improved modestly over the past several months, and they expect much of the momentum to continue in 2021 driven by strength in medium-sized deals despite the continued slowdown in large deal activity.”

Some large standardization deals can be expected in the back half of the year, “as large European conglomerates begin to adopt salesforce.com as their enterprise standard as part of their overall efforts to accelerate their cloud migration,” Kim said.

The stock “already fairly reflect risks” related to the acquisition of Slack Technologies Inc WORK, according to Loop. 

CRM Price Action: Shares of Salesforce.com were trading near-flat at $225.59 at last check.

Logo: Salesforce.com.