Salesforce.com, inc. CRM is being overlooked by investors despite strong revenue and free cash flow growth potential, according to Morgan Stanley. 

The Analyst

Keith Weiss maintained an Overweight rating on Salesforce with a $178 price target.

The Thesis

A strong case for 25%-plus free cash flow growth isn’t priced into Salesfore shares and that, coupled with investor concern around a slowdown in the core business, creates a “strong buying opportunity” in a core service-as-a-software asset, Weiss said in a Friday note. (See his track record here.) 

The analyst said he sees a clear path for Salesforce to more than double revenues by fiscal 2023, even with merger and acquisition dilution in the near-term.

Salesforce shares have underperformed, advancing just 3% year-to-date against its software peer group thanks to M&A dilution, Weiss said.

The company earlier this summer sealed up a $15.7-billion acquisition of data analytics firm Tableau Software. 

Salesforce enjoys a favorable competitive position, and there’s healthy customer demand across its product offerings, the analyst said. 

"With enterprise IT spend focused on digital transformation, Salesforce remains one of the best secularly positioned names in software and a long-term share gainer within an estimated $200B+ Total Addressable Market." 

Price Action

Salesforce shares were down 1.84% at $140.73 at the close Monday.