UPDATE: Bank of America Reiterates on RingCentral on Higher Growth Trajectory Confidence
In a report published Thursday, Bank of America analyst Kash Rangan reiterated a Buy rating on RingCentral (NYSE: RNG), and raised the price target from $22.00 to $25.00.
In the report, Bank of America noted, “We have higher confidence in the growth trajectory of the Office business (+67% Y/Y in 2013, +45% Y/Y in 2014E), which represented 65% of total MRR in 2013 (72% in 2014E). With the addition of video, we anticipate more customers shifting to the higher priced Office Enterprise Edition at a $10 price uplift from the Premium Edition.
"RNG is a young company generating solid growth, albeit with operating losses. Our $25 PO implies 7.9x CY14E EV/Revs and is a 20% premium to the comps given our view of RingCentral's better growth rate and large market opportunity. Our four-part valuation methodology includes: venture capital style margin estimates; lifetime value of customers (LTV); maintenance revenue analysis; and comparables.”
RingCentral closed on Wednesday at $21.88.
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