Finding Zen With Zendesk (Credit Suisse Is)

• Zendesk, Inc. ZEN stock has risen 5.15 percent over the last five trading days.
• Credit Suisse’s Philip Winslow has upgraded the rating on Zendesk from Neutral to Outperform, while raising the price target from $25 to $30.
• Winslow believes that the market is under-appreciating the company’s ability to sustain its strong revenue growth.

According to the Credit Suisse report, “Zendesk is well positioned to monetize the growing need among underserviced small- and medium-sized businesses (SMB) for modern, multichannel customer service technologies.”

In addition, given that Zendesk’s cloud-based application architecture offers “many unique advantages,” Winslow expects the company to continue to gain share of the customer service market.

Also, Zendesk’s recent successful move to upstream is also expected to continue, with the company likely to extend its product portfolio in order to meet the demand of larger account that have “more complex business needs and process.”

The company is extending its portfolio by “(1) increasing the capabilities of its Customer Engagement platform…, (2) better integrating and upselling its Live Chat feature, and (3) continuing to add more robust analytics functionality,” the report stated.

Winslow believes that if investors gained confidence in the company’s ability to sustain its growth, the stock would trade in-line with the peer group.