BofA Reiterates Buy on Salesforce (CRM) Amid Informatica Talks

On May 23, Bank of America Securities analyst Bradley Sills reiterated his Buy rating on Salesforce Inc. (NYSE:CRM) stock and raised his price target from $350 to $360, following a Bloomberg report that the company may acquire software company Informatica Inc. (NYSE:INFA). Informatica provides AI-powered enterprise cloud data management services. Sills highlighted that Informatica has a strong roster of large clients and solid data integration and governance expertise. He thus believes that the deal would strengthen Salesforce’s data management offerings.

Sills also pointed out that Informatica’s transition towards cloud-based services would gradually improve the combined company’s revenue growth rate. The deal is not expected to dilute the cash flow profile as Informatica reports a comparable unlevered free cash flow margin (around 35%). Given these factors, the analyst views the potential acquisition as a positive for Salesforce’s long-term earnings growth and thus maintains his optimistic view.

Salesforce previously attempted to acquire Informatica in April 2024, but the deal didn’t go through. Interestingly, Informatica was valued at approximately $12 billion at that time. Despite an 18% rally on Friday, May 23, the stock is now valued at just over half of that 2024 level.

Private equity firm Permira and Canada Pension Plan Investment Board are Informatica’s largest shareholders, holding stakes of 32% and 25%, respectively. Bloomberg also reports that Cloud Software Group, earlier known as Citrix Systems Inc., is also in the fray. If the deal is agreed on, it could be announced as soon as this week.

Salesforce Inc. (NYSE:CRM) is a global leader in customer relationship management (CRM) software. Its cloud-based platform provides solutions for sales, service, marketing, and commerce, enabling businesses to build stronger customer connections using the power of data and AI.

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