Salesforce Buying Spree Worries Analyst Who Sees Informatica Deal As Cover For Weak Growth

DA Davidson analyst Gil Luria maintained Salesforce Inc CRM with an Underperform and a $200 price target on Tuesday.

On Tuesday, Salesforce announced it had agreed to acquire Informatica Inc INFA for $8 billion or $25 per share, net of its current investment in the company in cash (11% premium to Informatica’s Friday close), Luria said.

According to the analyst, this is Salesforce’s first headline M&A deal since the company acquired Slack in 2021 for $28 billion.

Also Read: Salesforce Sales Cloud, AI Integration, And Cloud Upsells Drive Analyst Confidence In Long-Term Growth

Since 2021, Salesforce has completed several strategic bolt-ons to enhance its data and AI offerings. The Informatica deals mark the third consecutive transaction focused on adding incremental data capabilities to the company’s growing product portfolio, specifically its Data Cloud offering.

While he noted potential benefits from adding Informatica’s data management capabilities, he is hesitant to endorse the deal given Informatica’s suboptimal execution track record and legacy technology offerings.

Luria noted that part of the reasoning for the rerating was that Salesforce would start covering up its slowing organic growth with acquisitions. The first part was evident on Tuesday, and the second part will be evident when Salesforce reports on Wednesday after the close, as per the analyst.

While the acquisition may become financially accretive in the second year, he did not believe that buying a legacy technology company that has lost its growth would change the fact that Salesforce is losing its own organic growth.

Luria said that just over a year ago, in April 2024, it was rumored that Salesforce was in advanced talks with Informatica to acquire the business for ~$10 billion.

While Informatica shareholders welcomed this news, Salesforce investors did not respond favorably, and shares declined 7% after the announcement, the analyst said.

He noted that several factors led to this initial reaction, but the wave of criticism from investors and market analysts seemed to center around Salesforce’s intentions to integrate Informatica’s legacy data capabilities with the company’s existing data cloud offering, which it has been building over the past few years.

Luria also inhabited this camp, taking a more skeptical view of this deal’s long-term strategic rationale from a product and innovation perspective.

Going forward, Luria expects Salesforce to continue acquiring software providers who offer additive features, allowing the business to push Agentforce to incremental customers.

The analyst is already street low for fiscal 2026 revenue growth at 5.5% versus consensus of 7.5%.

Price Actions: CRM shares traded lower by 0.37% at $276.19 at the last check Wednesday.

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