Slack Technologies (WORK) - Get Report shares fell Wednesdayafter Morgan Stanley analyst Keith Weiss downgraded the workplace collaboration software platform to underweight from equal-weight, keeping his share-price target at $27.
He cited “a fading positioning versus an intensifying competitive landscape." Slack “remains challenged in proving its differentiation for information worker use cases,” Weiss wrote in a commentary.
Slack recently traded at $29.27, down 5%. The stock has climbed 37% so far this year.
Slack is vulnerable after the rise in its stock price this year, he said. There is “potential for consensus FY22 and FY23 revenue and billing estimates to move lower,” he said.
Morningstar analyst Dan Romanoff offered a mixed assessment of Slack after its earnings report last month.
“No-moat Slack beat our expectations and its own guidance and raised its revenue outlook for the year,” he wrote. “Unfortunately for management, revenue guidance that is in line with Street expectations may not be enough to quench investors’ thirst for growth.”
Although it “seems like an obvious work-from-home enabling technology, Slack is seeing macro-related pressure,” Romanoff said.
“We see signs of encouragement, including commentary that trends improved as the quarter progressed. … We also think that Slack Connections will help continue to drive viral adoption,” he said.
“Still, there were data points that trended in the wrong direction, macro-driven or otherwise, including a nontrivial deceleration in billing growth and declining net dollar retention.”
Romanoff put Slack’s fair value at $20.