John M. Chase
Morgan Stanley made a couple of ratings changes in the software space on Thursday, upgrading cloud giant Salesforce (NYSE:CRM) and open source security firm JFrog (NASDAQ:FROG), citing the benefits of continued product innovation and artificial intelligence.
Salesforce
Morgan Stanley's Keith Weiss boosted his rating on Salesforce (CRM) shares to overweight from equal-weight and upped his price target to $350, noting that investors have "low" expectations for any potential top-line drivers, including the recent price increases, product bundling and the adoption of the Data cloud. Weiss said that while the ramp in generative AI app is still likely at least 12 months away, Data Cloud should help boost Salesforce's (CRM) growth next year.
Weiss also pointed out that Salesforce (CRM) trades at a discount to large cap software peers on a growth-adjusted GAAP earnings basis.
Salesforce (CRM) shares rose more than 2% in premarket trading on Thursday.
Analysts are overwhelmingly bullish on Salesforce (CRM). It has a BUY rating from Seeking Alpha authors, while Wall Street analysts rate it a BUY. Conversely, Seeking Alpha's quant system, which consistently beats the market, rates CRM a STRONG BUY.
JFrog
Morgan Stanley's Sanjit Singh raised the firm's rating on JFrog (FROG) shares to overweight from equal-weight and bumped the price target to $42, stating that it should benefit from a rebound in software development.
Singh also said that with new products and a rise in cloud growth, the company should hit 20% revenue growth and 40% free cash flow growth, as shares trade at just 6.6 times expected 2025 revenue.
JFrog (FROG) should also reap the rewards as enterprises restart their transformation initiatives and continue to build out the next wave of AI-powered apps.
JFrog (FROG) shares rose 2.7% in premarket trading on Thursday.
Analysts are largely bullish on JFrog (FROG). It has a HOLD rating from Seeking Alpha authors, while Wall Street analysts rate it a BUY. Conversely, Seeking Alpha's quant system, which consistently beats the market, rates FROG a STRONG BUY.