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.
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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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