BOFA reiterates buying Salesforce (CRM) in Informatica talk

On May 23, Bank of America Securities analyst Bradley Sills reiterated his buy rating on Salesforce Inc. (NYSE:CRM) stock and raised its price target from $350 to $360 after Bloomberg reported that the company could acquire software company Informatica Inc. (NYSE:INFA). Informatica provides AI-driven enterprise cloud data management services. Sills stressed that Informatica has a large roster of large customers and reliable data integration and governance expertise. Therefore, he believes the deal will strengthen Salesforce's data management product.

Sills also noted that Informatica's transition to cloud-based services will gradually increase the revenue growth rate of consolidated companies. As Informatica reports comparable, leveraged free cash flow margins (approximately 35%), the transaction is not expected to dilute cash flows. Given these factors, analysts have maintained an optimistic view as a positive view of Salesforce's long-term revenue growth.

Salesforce had previously tried to acquire Informatica in April 2024, but the deal failed. Interestingly, Informatica was worth about $12 billion at the time. Despite a 18% rally on Friday, May 23, the stock is now worth just over half of what it is in 2024.

Private equity firms Permira and the Canadian Pension Plan Investment Commission are the largest shareholders of Informatica, holding 32% and 25% of shares, respectively. Bloomberg also reported that the cloud software group (early known as Citrix Systems Inc.) was also in the competition. If an agreement is reached, it can be announced this week.

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

Although we acknowledge the potential of CRM as an investment, our belief is that certain AI stocks have higher returns and limited downside risks. If you are looking for more promising AI stocks than CRM and have 100x upside potential, check out our report Cheapest AI stocks.

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