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On Tuesday, Truist Securities revised its stance on Informatica (NYSE:INFA) stock, downgrading the rating from Buy to Hold while slightly increasing the price target to $25.00, up from $24.00. The adjustment follows the announcement that Salesforce (NYSE:CRM), a prominent player in the software industry with a market capitalization of $265.5 billion, intends to acquire Informatica for an equity value of roughly $8 billion, net of Salesforce’s existing investment in the company. According to InvestingPro analysis, Salesforce is currently trading below its Fair Value, suggesting potential upside for investors.
Informatica’s Class A and Class B-1 common stockholders are set to receive $25 in cash per share as part of the acquisition agreement, which has already been approved by both companies’ boards of directors. The transaction is slated for completion in the first half of 2026, pending regulatory clearances. Stockholders representing about 63% of Informatica’s voting power have consented to the acquisition in writing. For Salesforce, which generated $37.9 billion in revenue over the last twelve months with impressive gross profit margins of 77.2%, this acquisition represents a strategic expansion of its capabilities.
Truist’s previous Buy rating was based on the belief that Informatica’s shares were undervalued and that its capabilities could attract potential buyers. The firm views the acquisition as beneficial for Informatica’s shareholders, especially as the company navigates its business model transformation and cloud transition. Despite cloud subscription revenue growing above 30%, challenges in transitioning from the legacy business model have capped overall revenue growth to low single digits.
The integration with Salesforce’s larger platform is expected to capitalize on Informatica’s strengths. Nevertheless, Truist has moved to a Hold rating since the shares have reached the target price. The firm acknowledges a 5% upside to the announced deal price but does not anticipate a competing bid to surpass Salesforce’s offer. InvestingPro data reveals Salesforce maintains a strong financial health score of GOOD, with moderate debt levels and robust cash flow generation. Subscribers to InvestingPro can access 8 additional key insights and a comprehensive Pro Research Report that provides deep-dive analysis of Salesforce’s financial position and growth prospects.
Salesforce’s strategic acquisition is likely to reinforce its data management business, complementing previous acquisitions such as MuleSoft and Tableau. Informatica’s tools are designed to improve data trustworthiness, an increasingly important issue for enterprises investing in AI. With Salesforce’s focus on AI, the acquisition could accelerate the adoption of new capabilities post-integration.
More details on the acquisition’s implications and roadmap are expected when Salesforce reports earnings tomorrow after market close. The $8 billion equity value translates to a 5.1x EV/sales multiple based on Truist’s 2025 estimates and 19x EV/adjusted free cash flow, which the firm considers a fair price given Informatica’s strong technological assets and the headwinds faced during its business transition.
In other recent news, Salesforce.com announced plans to acquire Informatica for approximately $8 billion, marking it as one of Salesforce’s largest acquisitions. The purchase price of $25 per share represents a 30% premium over Informatica’s recent closing price. Canaccord Genuity responded by lowering its price target for Salesforce from $400 to $350, while maintaining a Buy rating. Meanwhile, DA Davidson maintained a Neutral rating on Informatica, expressing some reservations about the acquisition, despite its inclusion in their STAMPEDE list for special situation investment ideas.
DA Davidson also reaffirmed an Underperform rating for Salesforce, citing concerns about Informatica’s technology and execution. On the other hand, Mizuho (NYSE:MFG) Securities reiterated an Outperform rating for Salesforce, focusing on the potential path forward for the company’s clinical programs. UBS revised its price target for Salesforce to $300, maintaining a Neutral stance, and noted potential risks related to mergers and acquisitions. These developments indicate significant strategic moves by Salesforce, with varied analyst opinions reflecting cautious optimism and concerns about integration challenges.
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