Brean Capital Upgrades salesforce.com (CRM) to Buy

Brean Capital upgraded salesforce.com (NYSE: CRM) from Hold to Buy with a price target of $85.00, saying the upsell opportunity on Marketing & Services Clouds is now better aligned with core Sales Cloud customer needs and will aid in growing New ACV in FY’17 and beyond.

Analyst Sarah Hindlian commented, "We are upgrading Salesforce.com to a Buy from a Hold rating and establishing a TP of $85 from a prior FV estimate of $76. We believe the upsell opportunity on Marketing & Services Clouds is now better aligned with core Sales Cloud customer needs and will aid in growing New ACV in FY’17 and beyond. In our analysis, we highlight: 1) the importance of upsell in the SaaS business model, and its significance to Salesforce.com given the size of its installed customer base; 2) our findings based on work with marketers of pent-up demand for better ad management tools, which we expect will drive Marketing Cloud as new products roll-out; and 3) changes in customer service trends, which we anticipate will continue to positively impact Service Cloud. We believe deeper cross-cloud integration and product improvements will aid upsell, billings, and subsequent revenue growth, even as op. margins continue to advance. As a result, we are conservatively increasing our FY’17 and FY’18 Total Revenue estimates from $7.89bn to $8.0bn, and from $9.65bn to $9.75bn, ~1% and ~3% above consensus, respectively."

For an analyst ratings summary and ratings history on salesforce.com click here. For more ratings news on salesforce.com click here.

Shares of salesforce.com closed at $69.16 yesterday.

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