Morgan Stanley is a big believer in the consolidation between Salesforce and MuleSoft.
The firm raised its price target to $178 from $153, a 16 percent escalation, for Salesforce shares, predicting a big rise in its sales during the coming years from the trade.
In March Salesforce announced an agreement to buy MuleSoft for about $6.5 billion. MuleSoft’s outputs enable companies to stitch together disparate software applications, figures and devices. The deal closed in May.
“Unlocking data trapped in legacy ways via MuleSoft brings SFDC [Salesforce.com] to the forefront of driving digital transmogrification for its customers,” analyst Keith Weiss said in a note to clients Tuesday. “Consensus assumptions likely underestimate this growth potential and SFDC’s improved M&A course record, driving our estimates and price target higher.”
Weiss iterated his overweight rating for Salesforce shares.
The analyst predicts MuleSoft on add more than $1 billion in sales to the company by 2021 versus an believed $449 million in sales this year.
“The acquisition of MuleSoft straight addresses the challenge of connecting and utilizing data trapped in legacy combinations more efficiently into Salesforce.com’s platform, extending the overall value proposition into a broader cross-breed (public and private) cloud environment required for most larger ventures,” he said.
Salesforce shares closed up 1.5 percent Tuesday after the communiqu. Its stock is up 41 percent this year through Monday versus the S&P 500’s 6 percent rise.