CRM: “We Would Be Buyers on Weakness”

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Forbes.com, Fall, 2011. This article was placed on behalf of the U.S. based equity research effort of institutional broker and investment bank Canaccord Genuity. It was part of a series of articles developed under an agreement with forbes.com to work with a variety of contributors and assist them in delivering actionable investment ideas each week. The site, forbes.com is one of the top 500 sites in the world with nearly 10 million subscribers and approximately 100 million page views a month.

Canaccord Genuity technology analyst Richard Davis reiterated his BUY rating and $170 price target on Salesforce.com (CRM) after shares dropped 6% when the “calculated billings” was reported below expectations . Mr. Davis said:

“We will take our medicine today, but we have lost none of our conviction that Salesforce.com should be a core holding in any growth portfolio. We would be buyers on weakness.”

He added, “Our view is that at some point, perhaps once we get back to a less skittish market, investors will have sufficient confidence in Salesforce’s outlook that the stock will move higher; and in our opinion much higher. Indeed, we believe it is possible that CRM shares could double within 3-4 years, which would imply a 20-25% annual pace of appreciation.”