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RingCentral Analysts Bullish After Earnings Beat

Business-communications-system provider RingCentral's quarterly report elicited a number of bullish comments from Wall Street's analysts.
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RingCentral  (RNG) - Get Free Report is gaining after analysts lauded the business-communications provider's better-than-expected earnings report.

The Belmont, Calif., company's shares at last check were up 8.6% to $230.99 after analysts at Morgan Stanley, Rosenblatt and Guggenheim updated their takes on the stock.

The company's tech enables a business to connect office-based and mobile employees worldwide with all manner of communications - phone, fax, online, text, conference and collaboration - within a single system.

Analysts at Rosenblatt Securities raised their price target to $245 a share from $215 and affirmed a buy rating on the stock.

RingCentral's “vertical-centric go-to-market strategy continues to distance the company from its competitors,” the analysts said. New partnerships give the company “plenty of growth runway,” they said.

Guggenheim maintained its buy rating and raised its price target to $250 from $225.

The quarter was a “resounding beat” and the company’s best in two years, with an outlook ahead of expectations, the firm said. That outlook is “still leaving room to outperform.”

Guggenheim analysts said RingCentral is “very well positioned to become the market leader.”

Analysts at Morgan Stanley raised their price target to $205 a share from $195 while affirming an equal-weight rating on the stock.

The company’s results were “meaningful upside to expectations,” though the large earnings beat was largely expected due to the recent share-price appreciation, Morgan Stanley said.

The beat was driven by the partnerships, which “present a long tail of opportunities” for the company. 

But RingCentral's current valuation already has those considerations priced in the stock, leading Morgan Stanley to maintain its neutral rating on the stock.

RingCentral reported fourth-quarter adjusted earnings of 22 cents a share, a penny better than expected, according to a FactSet-derived survey. Revenue of $252.9 million topped estimates of $239.5 million. 

The company expects first-quarter revenue between $257 million and $259 million vs. estimates of $249.2 million.