Salesforce.com Shoots Higher

Two analysts push one of their favorite growth stories.
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A pair of bullish sell-side analyst reports gave shares of

Salesforce.com

(CRM) - Get Report

a strong boost Thursday, pushing the stock close to its 52-week high of $22.70.

In recent trading, shares were up $1.35, or 6.5%, to $22.10 on heavy volume.

Prudential analyst Brent Thill raised his target price to $25 from $21, saying, "After growing revenue at a 99% CAGR

compound annual growth rate over the last three years, Salesforce.com is just getting going."Salesforce, which sells business software that runs over the Web in competition with companies such as

Siebel Systems

(CRM) - Get Report

, saw new paying subscribers grow at a CAGR of 62% to 227,000.

But Thill believes that Salesforce has penetrated only about 1% of its potential user base.

Similarly, Morgan Stanley analyst Ross MacMillan reiterated his overweigh rating and price target of $24 and called Salesforce "our best growth idea." He noted that the company is making inroads into enterprise accounts, a segment dominated by Siebel, and is adding seats within those accounts, a critical step.

Prudential does not have an investment-banking relationship with Salesforce; Morgan Stanley does.

Analysts polled by Thomson First Call are expecting a profit in the July quarter of 4 cents a share, on sales of $71.45 million. For 2006, analysts are expecting a 16-cent profit on sales of $304.7 million.

The company's strong outlook is a sharp contrast to struggling Siebel, which last week

lowered guidance for the current quarter. The news was particularly striking because the company recently fired its CEO for missing quarters, and there was some feeling that the company would show some improvement in license revenue this quarter.