Considering The Opportunity

While you never want to catch a falling knife, there are signs that Salesforce shares have put in a low, at least for the short term. They had traded down towards $200 in early March but hit some decent support and found a consistent flow of buyers at that price. A higher low was put in at the end of March, and a higher one again last week. This tells us that the big money is starting to pick up shares on every dip, and given the sellers were unable to get the stock below $200, the technical momentum has swung to the upside. The stock’s RSI is moving off the low 30s and its MACD is about to have a bullish crossover on the daily chart. All of these signs suggest there’s strong momentum to be found on the bid right now.

In addition, some of Wall Street’s heavyweights have started to row in behind the company. Morgan Stanley was out with an upgrade to Salesforce shares yesterday, as they moved them from an Equal Weight to a Buy rating while also upping their price target to $270. Thinking you’ve spotted an attractive technical setup is one thing, but having someone like Morgan Stanley identify an upside of more than 20% from the current price is another entirely.

Analyst Keith Weiss and his team see three key catalysts that should help Salesforce with “getting its mojo back“. These include “billings and booking metrics reflecting the improved demand trends with the economic reopening, proving out the strategic rationale for the Slack acquisition once the deal closes, and providing a more constructive margin outlook.”

Long Term Potential

Morgan Stanley’s bullishness builds on that of Bank of America’s, who last month reiterated their Buy rating and $275 price target. They’re particularly excited about the “long runway for 17%+ organic revenue growth, which is led by front office digital transformation among enterprises.” And in March, Wedbush’s Dan Ives wasn’t afraid to start calling the sell-off overdone in the context of Salesforce long-term potential.

This is all solid stuff for those of us now considering a long position, as shares have put in a low and are now moving up on the back of bullish sentiment. They were bought right up into yesterday’s close and were holding onto their gains in Thursday’s pre-market session. Don’t be surprised if we start seeing a few of the bears who’ve been in control for the past six months start to throw in the towel, as the momentum is firmly with the bulls for now.

salesforce.com is a part of the Entrepreneur Index, which tracks some of the largest publicly traded companies founded and run by entrepreneurs.