Analyst Hangs Up On RingCentral With Zoom Waiting To Pounce

Shares of RingCentral Inc RNG have been under pressure since the company announced disappointing guidance for the first quarter and full year.

While the migration of PBX to the cloud was a tailwind for the company, the next leg of growth from the convergence with digital AI assistants will require investment, according to Oppenheimer.

The RingCentral Analyst: Timothy Horan downgraded the rating for RingCentral from Outperform to Perform.

The RingCentral Thesis: Although the company has a premium voice product and good partners, it faces strong competition from Microsoft Corp.’s MSFT Teams and Zoom Video Communications Inc ZM as cloud communication services converge with productivity tools, Horan said in the downgrade note.

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“Lack of transparency from management also warrants caution — underlying unit economics (CAC, LTV, lines, churn, etc.) are a black box, and Adj. EBITDA is not converting to FCF as much as we expected,” the analyst wrote.

“Many of these problems can be fixed, or the company could be acquired as it has the best UCaaS Service, but it will take time,” he added.

RNG Price Action: Shares of RingCentral had declined by 2.31% to $31 Friday morning.

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