Informatica acquisition is ‘right deal at the right time’ for Salesforce: Wedbush

The proposed acquisition of enterprise cloud software company Informatica (NYSE:INFA) is the “right deal at the right time” for Salesforce (NYSE:CRM), Wedbush Securities said.

“Despite CRM not pursuing a big deal of this size since Slack in 2021 for $28 billion, we view this deal as a smart and strategic deal for customer acquisition as INFA’s strong customer base of over 5,000 customers, including ~2,500 cloud subscription ARR customers and over 80% of the Fortune 100, leverages this technology for analytics and AI-powered processes which could strengthen CRM’s AI strategy,” Wedbush analysts wrote in a note to clients.

They continued: “INFA has been a long-time acquisition candidate, and we believe this has been in the works for quite a while as this would be smart a strategic move by CRM in our view as INFA would bolster its AI capabilities by improving its strategy leveraging proprietary data as there are cost synergies of 15% to 20% for CRM through this acquisition based on our analysis.”

The acquisition would allow for greater artificial intelligence opportunities for Salesforce and allow for more cross-selling opportunities, the analysts added. They maintained their Outperform rating and $425 price target on Salesforce after the announcement.

Salesforce is set to report its fiscal first-quarter results after the close of trading on Tuesday. A consensus of analysts expect the company to earn $2.55 per share $9.75B in revenue.