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KeyBanc: Salesforce Poised To Benefit From Data Opportunity After Tableau Acquisition

Priya Nigam

Salesforce.com, inc. (NYSE: CRM) has inked a definitive agreement to acquire Tableau Software Inc (NYSE: DATA).

Tableau's revenue could triple to exceed $3 billion by 2023 given the massive data modernization opportunity it faces, according to KeyBanc Capital Markets.

The Analyst

Brent Bracelin maintained an Overweight rating on salesforece.com with an unchanged $180 price target.

The Thesis

As more enterprises shift their core backend data stores to the cloud, there will be growing demand to modernize reporting tools and business intelligence applications, Bracelin said in a Thursday note. (See his track record here.) 

Data modernization is estimated to be a $41-billion market, representing an untapped opportunity of $15 billion for modern self-service BI and visualization tools like Tableau, the analyst said. 

KeyBanc expects Tableau's revenue to nearly triple from an estimated $1.15 billion in 2018 to cross $3 billion in 2023, provided the company can sustain an annual growth rate of 23% on the back of demand for data modernization and its transition to a subscription model.

This estimate does not include potential upside from cross-selling to Salesforce’s over 150,000 customers, broader channel distribution and other product synergies, Bracelin said. Tableau could generate more than $1 billion in operating cash flows by 2023, he said. 

The Tableau deal could add incremental revenue of $400 million in 2020, $1.3 billion in 2021 and $2 billion in 2022, the analyst said

Bracelin recommends purchasing Salesforce shares ahead of the company’s investor event July 10.

Price Action

Salesforce shares were down by 0.17% at $150.45 at the time of publication Friday. 

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Photo courtesy of Salesforce. 

Latest Ratings for CRM

Date Firm Action From To
Jun 2019 Maintains Buy
Mar 2019 Initiates Coverage On Outperform
Mar 2019 Initiates Coverage On Buy

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