Salesforce.com's (CRM) acquisition of MuleSoft will kick-start its push into cloud computing, says one analyst who raised his price target on the leader in software-as-a-service.
XCredit Suisse's Michael Nemeroff hiked his price target on Salesforce.com to 150 from 135. He noted San Francisco-based Salesforce's March buyout of MuleSoft — its biggest acquisition ever at $6.5 billion in cash and stock — will have a quick impact.
"MuleSoft immediately creates new opportunities for Salesforce.com to address midsize and large enterprises that will likely need to adopt a hybrid cloud strategy due to their complex, heterogeneous data environments," Nemeroff said in a note to clients.
Salesforce.com has partnered with Alphabet's Google, also considered to be a cloud computing stock to watch.
Salesforce.com edged up 0.6% to close at 125.12 on the stock market today. Shares in the software giant are trading above its 50-day-moving-average. The stock has a buy point of 128.97, having consolidated in a flat base chart pattern.
Subscription Model
Salesforce sells software under a subscription model. Its software helps businesses organize and handle sales operations and customer relationships. The company has expanded into marketing, customer services and e-commerce.
"Another less understood benefit from MuleSoft is that it potentially reduces friction integrating future (acquired) software clouds," added the Credit Suisse analyst. "Specifically, Salesforce could now more easily enter the ERP (enterprise resource planning) and HCM (human capital management) markets."
MuleSoft, which went public in 2017, sells software that automates the integration of new tools with legacy enterprise platforms and speeds application development.
In the December quarter, MuleSoft's revenue rose 60% to $88.7 million. When it reported fourth-quarter earnings MuleSoft set a revenue target of $1 billion in 2021.
MuleSoft says it currently has more than 1,000 customers worldwide. They include McDonald's (MCD), Coca-Cola (KO) and Netflix (NFLX).
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The post Salesforce.com Price Target Hiked; MuleSoft To Spur Cloud Computing appeared first on Investor's Business Daily.
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