Salesforce.com (CRM) - Get Report "remains one of the best secularly positioned names in software and a long-term share gainer," a Morgan Stanley analyst said Tuesday as he boosted the cloud-computing company's price target to $225 from $216.
Shares of Salesforce were up slightly Tuesday to $190.27.
Analyst Keith Weiss, who reiterated his overweight rating on shares of the San Francisco-based company, said in a note to clients that "after pulling together a portfolio of leading solutions enabling digital transformation initiatives for their customers, Salesforce is ready to yield on those investments and sustain a 28% free cash growth (compound annual growth rate)" through fiscal 2024.
"This durable FCF growth is still not reflected in the multiple," Weiss added. "Strong positioning, an expanding solution portfolio and a large enterprise distribution capability supports our forecast of a ~20% revenue CAGR and ~$35+ billion in revenue by FY24," the analyst added.
Weiss said that "the vast majority of revenue is driven by Salesforce's core CRM (Customer Relationship Management) applications, which still represents a large and growing market opportunity."
"Our recent channel checks indicate a strong 2020 pipeline and 20%+ topline growth for Marketing and Service Cloud," he wrote, "the latter of which we expect to be Salesforce's largest revenue contributor this year."
At the same time, Weiss added, "we see slower growth in more mature segments such as Sales Cloud, which holds ~32% share of an increasingly competitive market for SFA (Sales Force Automation) software."
Salesforce.com is scheduled to report fourth-quarter earnings on February 25.