Shares of Slack Technologies jumped 37.6% on Wednesday after The Wall Street Journal reported that Salesforce is in advanced talks to buy the team collaboration software maker.
Citing people familiar with the matter, The Wall Street Journal reported that Slack (WORK) and Salesforce could reach a deal as soon as next week. With Slack’s market capitalization of over $17 billion, any deal would represent Salesforce’s largest-ever acquisition.
The move would help enhance Salesforce’s offerings across the team collaboration tools space. The company has made several acquisitions in this space including Tableau, a data visualization company, for $15.3 billion in 2019, and MuleSoft for $6.5 billion in 2018. (See WORK stock analysis on TipRanks)
In response to The Wall Street Journal report, Stephens analyst Ryan MacWilliams reiterated a Buy rating and a price target of $37 (9.1% downside potential). In a note to investors, MacWilliams wrote, “Slack with its sticky customer base of developers/strong enterprise adoption would be an interesting option for tech giants to compete with MSFT (Microsoft) for enterprise communications.”
Currently, the Street has a cautiously optimistic outlook on the stock. The Moderate Buy analyst consensus is based on 9 Buys, 6 Holds and 2 Sells. The average price target stands at $32.23 and implies downside potential of about 20.8% to current levels. Shares have gained 81% year-to-date.
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