Rosenblatt Discusses RingCentral's Potential Video Product Launch And Its Impact On Zoom Video

Zoom Video Communications Inc ZM has been one of the biggest market winners from the coronavirus-driven surge in employees working from home around the world.

However, one analyst says RingCentral Inc RNG is also getting a COVID-19 boost, and is anticipating an imminent product launch that will replace Zoom within the RingCentral customer base.

The Analyst

Rosenblatt Securities analyst Ryan Koontz reiterated his Buy rating and $245 price target for RingCentral.

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The Thesis

Koontz believes RingCentral will launch its own video product called RCMeeting within the next week.

“We expect that in the very near term RCMeeting will not only begin to be sold in RingCentral Office (RCO) bundles across most US segments, but it will also begin to replace the installed base of ZM at RNG customers,” Koontz wrote in a note.

He said RCMeeting will also eliminate the limit on simultaneous video conference participants that was part of the previous Zoom license.

Koontz said his research suggests RingCentral’s business has been booming across all segments since the U.S. COVID-19 outbreak began. He said this strong demand will likely continue throughout the second quarter as well.

While the outbreak may be temporary in nature, Koontz said RingCentral will likely benefit from customers being forced to work from home realizing the value and efficiency of cloud-hosted communication and collaboration.

For Zoom Video investors, Koontz said the loss of RingCentral will likely not have a material impact on overall revenue.

Benzinga’s Take

RingCentral and other companies that benefit from the work-from-home environment will continue to get a big business boost while the economy is shut down. The key for long-term investors will be whether or not they hold onto at least some of that business when things eventually get back to normal.

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