Why Salesforce Stock Bumped Higher on a Lousy Tuesday for the Market
Key Points
He cited a recent $3.6 billion deal as a key reason for maintaining his strong buy recommendation.
Last month, Salesforce announced it was acquiring customer agent developer Fin.
Tech stocks of all descriptions took it on the chin in Tuesday's trading session, with many of them landing in the red on generally gloomy sentiment. Happily for Salesforce (NYSE: CRM) investors, the veteran customer relationship management (CRM) company wasn't swept up in the rout. Instead, a positive analyst update helped push the shares to a gain of over 2%.
Still a Force in the industry
Tuesday was an ideal day to be on the receiving end of a bullish pundit note. Patrick Walravens, who covers Salesforce for Citizens, reiterated his market-outperform (i.e., buy) recommendation on the tech stock and his $315-per-share price target. That's more than double the company's most recent closing price.
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Walravens' optimism was fueled by Salesforce's latest acquisition, according to reports. The analyst said that the company's deal to purchase Fin, announced last week, will secure it a top customer agent business. Fin's artificial intelligence (AI) agent handles sophisticated customer inquiries across a wide range of both social and traditional media, Walravens added.
In his view, Fin's technology will unquestionably bolster its new owner's Agentforce platform and make it even more appealing, especially to small and medium-sized businesses.
A fine time for a bullish note
The prognosticator's latest positive review of Salesforce comes at a time when many software companies continue to be punished by investors. One of the main concerns for these folks is the considerable spending by such businesses on cutting-edge technologies, particularly artificial intelligence (AI).
Yes, Salesforce is spending a considerable amount to rope in Fin (the deal is valued at $3.6 billion). We have to keep in mind that management has never been shy to dip into the coffers, at times deeply, to buy a complementary and beneficial asset. I feel its track record has been quite good in this respect, and I'm buying Walravens' assessment that the deal will bolster Salesforce.
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Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Salesforce. The Motley Fool has a disclosure policy.
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