Selected stock price target news of the day - July 12, 2023
By Matthew Otto
Salesforce to Raise Prices
The decision to raise prices comes as Salesforce and other technology companies are investing in generative artificial intelligence (AI) to enhance their products and services. Over the past seven years, Salesforce has invested over $20 billion in research and development to add new features, including generative AI tools, to its software.
At the same time, revenues from cloud services, which experienced growth during the pandemic lockdown, have started to slow down. Major cloud players like Microsoft, Amazon and Alphabet have faced pressure as enterprise clients aim to optimize their cloud spending amidst rising borrowing costs.
Analysts Maintain Positive Outlook on Salesforce
- BofA Securities analyst Brad Sills reiterates a Buy rating and a $250 price target.
- Needham maintains a Buy rating and raises their price target to $250.
- Evercore ISI Group reiterates an Outperform rating and a $240 price target.
- Piper Sandler remains on Overweight rating and a $248 price target.
Analyst Gil Luria (D.A. DAVIDSON) has currently the highest performing score on CRM with 2/2 (100%) price target fulfillment ratio. His price targets carry on average an $-1.02 (-0.20%) potential downside and are fulfilled within an average of 5 days.
European Regulators Approve Broadcom’s Takeover of VMware
Broadcom’s $80 billion takeover of VMware has received clearance from European regulators, signaling a positive outlook for the technology sector and a potential resurgence in dealmaking. The European Commission approved the acquisition with certain conditions imposed on Broadcom. This approval suggests that tech mergers and acquisitions might face less resistance from regulators, particularly in Europe where competition watchdogs have historically been strict.
The technology industry has experienced a slowdown in dealmaking, partly due to concerns over regulatory scrutiny and the perception that regulators are reluctant to approve tech mega-mergers. Last year, Nvidia’s bid to acquire chip designer Arm was thwarted by regulators. However, with Broadcom’s acquisition receiving the green light in Europe, attention now turns to the United States, where the Federal Trade Commission is also scrutinizing the deal.
The approval of Broadcom’s acquisition by European regulators and the market response indicate a shift in the landscape of tech deal activity. These developments may suggest that the technology sector may experience an increase in mergers and acquisitions, as companies waiting on the sidelines may be encouraged to pursue deal opportunities.
Analysts Maintain Positive Stance on Broadcom
- Deutsche Bank analyst Ross Seymore Maintains with a Buy rating and raises the price target from $870 to $905.
- Mizuho analyst Vijay Rakesh Reiterates Buy rating and a price target of $840.
- Wells Fargo analyst Aaron Rakers Ramins in Equal-Weight rating and raises the price target from $600 to $800.
Analyst Christopher Rolland (SUSQUEHANNA) has currently the highest performing score on AVGO with 19/20 (95%) price target fulfillment ratio. His price targets carry on average an $88.76 (24.45%) potential upside and are fulfilled within an average of 213 days.
EU Fines Illumina €432 Million for Unapproved Acquisition
European Union regulators have fined Illumina a record 432 million euros ($476 million) for completing its acquisition of Grail without obtaining regulatory approval. The fine represents 10% of Illumina’s turnover, the maximum allowed under EU merger rules. Illumina plans to appeal the decision and has already set aside $453 million to cover a potential maximum fine.
The European Commission accused Illumina of intentionally proceeding with the merger before obtaining regulatory clearance, known as gun-jumping. Grail was also fined a symbolic amount by the European Commission. This marks the first time the commission has imposed a fine on the target of an acquisition. Illumina believes that the acquisition will benefit its shareholders and save lives, but the European Commission blocked the deal over concerns about innovation and consumer choice in the cancer detection test market.
Illumina has appealed the European Commission’s decision, arguing that the agency lacks jurisdiction to block the merger. A final decision on the appeal is expected in late 2023 or early 2024. If Illumina loses the appeal, the company has stated that it will divest Grail.
Analysts Reiterate confidence in Illumina
- Canaccord Genuity analyst Kyle Mikson reiterates Buy rating and a price target of $300.
- Piper Sandler analyst David Westenberg maintains Buy rating and sets a price target of $290.
Analyst Tycho Peterson (JPMORGAN) has currently the highest performing score on ILMN with 5/6 (83.33%) price target fulfillment ratio. His price targets carry on an average of $33.76 (14.13%) potential upside and are fulfilled within an average of 113 days.