Salesforce Inc (CRM)

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Is Salesforce (CRM) Stock A Buy? With Slack, Battle Versus Microsoft Enters New Phase
By: TheStreet | November 22, 2021

Whether to buy CRM stock often boils down to how an investor views two fundamental trends. One, rising corporate spending on digital transformation projects. And two, Salesforce.com's (CRM) penchant to make big acquisitions, such as Slack Technologies (WORK).

Salesforce stock reports third-quarter earnings on Nov. 30.

CRM stock has gained about 35% in 2021 as of Nov. 19. Salesforce stock has dipped from an all-time high of 311.75 on Nov. 19.

CRM stock sells software under a subscription model. Its software helps businesses organize and handle sales operations and customer relationships. The company has expanded into marketing, e-commerce and data analytics.

Amid the coronavirus pandemic, demand for next-generation collaboration and productivity tools has increased. In addition, many companies aim to automate operations and track key business metrics in order to support employees working from home.

One view is that spending on digital transformation projects will continue to be strong as the Covid-19 emergency eases. Such projects turn paperwork into electronic records and automate business workflows. More companies are investing in business analytics/artificial intelligence tools that scrub customer data.

Morgan Stanley analyst Keith Weiss in a report said Salesforce stock is will positioned based on a survey of spending priorities for chief information officers.

CRM Stock: Digital Transformation Spending Key

"Salesforce's core portfolio squarely addresses CIO's top priorities for digital transformation," Weiss said. "Our survey bolsters confidence in industry growth forecasts as marketing, CRM and customer service ranked highest among priorities. Meanwhile, we see momentum building in the market addressed by Slack as businesses implement tools to better collaborate and improve productivity while working remote in the 'new normal' post Covid."

San Francisco-based Salesforce on July 21 closed the Slack acquisition.

One issue for CRM stock is how software growth stocks are doing generally. The iShares Expanded Tech-Software Sector ETF rose 10% in October after falling 5.7% in September. As of Sept. 30, the software stock index was up nearly 24% in 2021.

At an investor day in December 2020, Salesforce said it aims to double revenue to $50 billion by 2026, including a $4 billion contribution from Slack. At the same time, Salesforce stock lowered its organic revenue growth target to 19% from 20% over the next four years...

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