Salesforce at Record as Street Sees ‘Compelling’ 2020 Prospects

(Bloomberg) -- Salesforce.com Inc. shares spiked to record levels on Monday, as analysts reiterated their positive views on the company’s 2020 prospects.

RBC Capital Markets upgraded the stock to top-pick status, from outperform, with the firm seeing “significant upside potential in 2020.” It also raised its price target to a Street-high view of $215 from $200. Analyst Alex Zukin noted the company’s forecast for revenue growth above 20% through its 2024 fiscal year, calling the stock “an important strategic asset.”

Also on Monday, SunTrust Robinson Humphrey called Salesforce one of its “compelling” software ideas for 2020, expecting the company to “solidly exceed” its own revenue forecasts.

Analyst Terry Tillman also said there were “interesting data points related to Salesforce customers now deciding to increase spend” with the company, providing an additional tailwind.

Shares gained as much as 3.3%, hitting an all-time intraday record. Salesforce has jumped more than 20% from an October low, but it was “a definite underperformer in 2019,” SunTrust wrote. The stock is up about 25% since the start of 2019, significantly lagging the broader tech sector, which is up almost 50% over the same period.

Optimism has been rising about Salesforce for several weeks; in December, Cowen named the company one of its “best ideas” for 2020. That growing bullishness comes in contrast to a more skeptical view toward software overall. While the group largely saw broad gains throughout 2019, it struggled toward the end of 2019 on concerns over their growth rates and valuation.

SunTrust remains bullish on the group, urging investors to “remain heavily invested in software in 2020 owing to a variety of powerful growth drivers ahead.” The firm sees “uninterrupted strong growth prospects” and demand, and in addition to Salesforce listed Smartsheet, Manhattan Associates and Workiva as names it sees as compelling.

To contact the reporter on this story: Ryan Vlastelica in New York at rvlastelica1@bloomberg.net

To contact the editors responsible for this story: Catherine Larkin at clarkin4@bloomberg.net, Steven Fromm

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