William Blair: ConvergeOne 'Well-Positioned' In Cloud, Collaboration And Security

ConvergeOne Holdings Inc CVON's services-led approach to address the full customer technology life cycle creates a unique value proposition, a William Blair analyst said. 

The Analyst

William Blair analyst Maggie Nolan initiated coverage of ConvergeOne with an Outperform rating. 

The Thesis

ConvergeOne has tapped into customer demand for a partner to guide them through the changing technology landscape from beginning to end, distinguishing it from its peers, Nolan said in a Monday note.

The company has a managed services-led approach, with a 90-percent renewal rate for managed, cloud and maintenance services, the analyst said. 

With a strong client base in the collaboration market — which accounts for two-thirds of ConvergeOne's revenue —  the company is poised to grow as the transition to cloud continues, Nolan said. 

William Blair expects gross margin to expand between 10 and 20 basis points on an organic basis, with additional expansion likely over time from acquisition activity. 

Nolan projects ConvergeOne's total addressable market will total $246 billion by 2021 compared to $164 billion in 2016, a CAGR of 8.5 percent.

"ConvergeOne is well-positioned in the fastest-growing addressable market segments: cloud, collaboration and security," she said. 

The Price Action

ConvergeOne shares are down about 7 percent over the past year.

The stock was up 1.5 percent at the time of publication Monday afternoon.

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