Skip to main content

Market Overview

Goldman Sachs Turns Bullish On RingCentral, Highlights Large Market Opportunity

Share:
Goldman Sachs Turns Bullish On RingCentral, Highlights Large Market Opportunity

The bullish case for cloud communication company RingCentral Inc (NYSE: RNG) is based on the company's growth prospects within the large Unified Communications as a Service (UCaaS) market, according to Goldman Sachs.

The Analyst

Heather Bellini upgraded RingCentral from Neutral to Buy with a price target lifted from $189 to $230.

The Thesis

RingCentral has direct exposure to the UCaaS market, which is expected to grow from more than $40 billion in 2020 to $48 billion in 2023, Bellini wrote in the note. Companies who boast hosted/cloud solutions should outperform legacy infrastructure rivals. In fact, RingCentral is best positioned to take advantage of the growing market given its 99.999% availability, the openness of its platform, and go-to-market advantages.

See Also: Bank Of America: RingCentral's Partnership With Avaya Off To Strong Start

RingCentral inked a partnership with Avaya last October and it will come to market in the first quarter of 2020. Bellini said while RingCentral doesn't expect to see any notable benefit until the back-half of the year, investors should be optimistic based on expectations for 2021.

Assuming RingCentral collects an average revenue per user (ARPU) of $33/seat/month from the partnership as part of a "Blue Sky" scenario, the company could report upside to current expectations in 2021. Specifically, current estimates call for annual recurring revenue of $1.425 billion in 2021, but if the partnership proves to be better than expected, ARR could come in at $1.63 billion.

Price Action

Shares of RingCentral hit a new 52-week high and were higher by more than 2.8% to $198.51 at time of publication.

Latest Ratings for RNG

DateFirmActionFromTo
Feb 2021Craig-HallumMaintainsBuy
Feb 2021Northland Capital MarketsMaintainsOutperform
Feb 2021JefferiesMaintainsBuy

View More Analyst Ratings for RNG
View the Latest Analyst Ratings

 

Related Articles (RNG)

View Comments and Join the Discussion!

Posted-In: Goldman Sachs Heather Bellini UCaaSAnalyst Color Upgrades Price Target Analyst Ratings Best of Benzinga

Latest Ratings

StockFirmActionPT
NIUDaiwa CapitalInitiates Coverage On41.5
QMCONorthland Capital MarketsInitiates Coverage On12.0
IBKRJefferiesInitiates Coverage On89.0
MRETFTD SecuritiesDowngrades18.5
SWKSGoldman SachsDowngrades135.0
View the Latest Analytics Ratings
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Premarket Activity
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Fintech Focus
A daily collection of all things fintech, interesting developments and market updates.
SPAC
Everything you need to know about the latest SPAC news.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at vipaccounts@benzinga.com