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Slack Shares Waver After Q3 Earnings Report; Barclays Is Bullish

Guidance was lighter than investors would've liked. Analyst Raimo Lenschow says the messaging-software company is on the comeback trail.
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Slack shares have been up and down on Thursday after the high-profile messaging and collaboration software company reported third-quarter earnings

Analysts at Barclays reiterated an overweight rating and $31 price target on the San Francisco company.

Slack beat analysts third quarter top- and bottom-line expectations Wednesday, but the stock fell after hours as fourth-quarter guidance was slightly lighter than expected.

Analysts at Barclays said Slack, which went public June 20, is on the comeback trail.

“The quarter showed the level of outperformance high-growth investors are expecting. Easier [comparisons] next year, the benefit from more of a focus on enterprise and the addition of the Shared Channel offering should be drivers,” analyst Raimo Lenschow wrote.

The company reported a third-quarter net loss of 2 cents a share, whereas analysts were expecting a loss of 8 cents. Revenue of $168.7 million was up nearly 60% year over year. Wall Street was looking for revenue of $156 million.

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For fourth-quarter guidance, Slack sees a loss of 6 cents to 7 cents a share against the Street estimate of a loss of 6 cents.

After hours on Wednesday, investors sent the stock down 6%. But that guidance is exactly where it should be, according to Lenschow.

“Q4 will be the one question for investors in this discussion as [comparisons] are very tough (97% billings growth)," he wrote. 

But "we see the in-line Q4 guidance as the correct, prudent way for management to reflect this. Slack continues to deliver on its path to be a next-generation collaboration platform that offers significant growth in the years to come."

Slack shares most recently were up 0.6% at $21.79. On the day so far, they've been up as much as 2.6% and off as much as 4.6%. 

Slack went public at $26. This year the shares have traded as high as $42 and as low as $19.53.