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This is Why Morgan Stanley Raised its Price Target for Salesforce

Salesforce gained some bullish sentiment from Morgan Stanley this month, and a new price target too. The firm has raised its price target on Salesforce shares to $178 from $153 and is optimistic over the company’s recent deal with MuleSoft.

Morgan Stanley is predicting that the company will see a large increase in its sales due to the deal. Analyst Keith Weiss remarked, “Unlocking data trapped in legacy systems via MuleSoft brings SFDC [Salesforce.com] to the forefront of driving digital transformation for its customers.”

It was back in March that Salesforce had announced that it agreed to buy MuleSoft for around $6.5 billion and closed the deal in May. The latter company offers products that enable companies to stitch together disparate software applications, data and devices.

Comments made about the deal in May included:

“Every company is undergoing a digital transformation and integration has never been more strategic,” said Marc Benioff, Chairman and CEO, Salesforce. “Now with MuleSoft, Salesforce will enable customers to connect all of the information throughout their enterprise across all public and private clouds and data sources—radically enhancing innovation. I am thrilled to welcome MuleSoft to the Salesforce Ohana.”

“By joining Salesforce, we have a tremendous opportunity to realize our vision for the application network,” commented Greg Schott, CEO of MuleSoft, now a Salesforce company. “Our team is excited about accelerating MuleSoft’s mission to connect any application, data and device by building innovative products that enable our customers’ continued success.”

“Pilot Flying J is transforming its guest experience across its network of more than 750 travel centers throughout North America to make life easier for drivers on the road,” said Mike Rogers, Senior Vice President, Chief Strategy and Information Officer, Pilot Flying J.

“By creating an application network that connects any app, data source or device, we were able to quickly deploy our myPilot mobile app. With MuleSoft and Salesforce, we have been able to deliver new features to our guests, including mobile payment and real-time parking availability data to professional drivers. We are excited about the collaboration between MuleSoft and Salesforce and how it will further benefit our guests by enabling us to deliver intelligent, connected experiences.”

“Deloitte has long-standing relationships with Salesforce and MuleSoft and looks forward to exploring the innovative ways to harness this combined technology to help clients meet their toughest business challenges,” commented Jason Girzadas, Deloitte Global Managing Principal, Consulting.

“Salesforce’s purchase of MuleSoft puts the customer right at the heart of digital transformation. Many companies are still lagging due to the difficulty in integrating legacy infrastructure, automating manual and paper-based processes, and managing data growth. MuleSoft will play a starring role in projects for the businesses that still have not formalized digital transformation strategies,” said Sheryl Kingstone, Research Director, 451 Research.

Weiss also noted, “Consensus expectations likely underestimate this growth potential and SFDC’s improved M&A track record, driving our estimates and price target higher.”

According to Weiss, MuleSoft will provide over $1 billion in sales to Salesforce by 2021, versus $449 million that is estimated in sales this year.

“The acquisition of MuleSoft directly addresses the challenge of connecting and utilizing data trapped in legacy systems more efficiently into Salesforce.com’s platform, extending the overall value proposition into a broader hybrid (public and private) cloud environment required for most larger enterprises,” said Weiss.

The Morgan Stanley analyst has an “overweight” rating on the stock.

Salesforce.com Inc is expected to report earnings on August 29th after the market closes.

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