Piper Sandler Remains Bullish On Slack On Broader Enterprise Adoption

Slack Technologies Inc WORK confirmed after market close Monday that its biggest customer International Business Machines Corp IBM had plans of going “wall to wall” with its chat app.

Although this may not lend significant upside to the current billings growth estimate for the January quarter, additional indications of wall-to-wall adoption by large enterprises could elevate Slack’s value as a strategic M&A (mergers and acquisitions) target, according to Piper Sandler.

The Analyst

Piper Sandler’s Brent Bracelin maintained an Overweight rating on Slack with a price target of $30.

The Thesis

Slack’s latest announcement implies a potential addition of 200,000 seats at IBM, given that the IT giant currently has 350,000 employees, Bracelin said in the note.

IBM’s wall-to-wall adoption of Slack may not lift the current Street estimate of 40.6% year-over-year billings growth for the fourth quarter, given the contract terms and tough compares, the analyst mentioned. He added, however that IBM’s move is an indication of Slack’s broader enterprise adoption.

Bracelin further wrote, “Our proprietary Piper Sandler JobsTracker analysis of new job postings shows several large enterprises that are hiring employees with Slack skill preferences.”

Referring to Slack’s prospects as a strategic M&A target, the analyst named IBM, Alphabet Inc GOOGL, Oracle Corporation ORCL, ServiceNow, Inc. NOW, Atlassian Corporation PLC TEAM and salesforce.com, inc. CRM as the potential suitors.

Price Action

Shares of Slack were down 4.11% to $25.44 at time of publication.

Related Links

Amazon Wants To Depose Trump, Pentagon Officials In $10B JEDI Contract Protest

Slack's Stock Trades Higher On Report IBM Moves Employees To Platform

 

Photo by Austin Distel on Unsplash

Posted In: Brent BracelinPiper SandlerAnalyst ColorNewsReiterationAnalyst RatingsTechMedia

Ad Disclosure: The rate information is obtained by Bankrate from the listed institutions. Bankrate cannot guaranty the accuracy or availability of any rates shown above. Institutions may have different rates on their own websites than those posted on Bankrate.com. The listings that appear on this page are from companies from which this website receives compensation, which may impact how, where, and in what order products appear. This table does not include all companies or all available products.

All rates are subject to change without notice and may vary depending on location. These quotes are from banks, thrifts, and credit unions, some of whom have paid for a link to their own Web site where you can find additional information. Those with a paid link are our Advertisers. Those without a paid link are listings we obtain to improve the consumer shopping experience and are not Advertisers. To receive the Bankrate.com rate from an Advertiser, please identify yourself as a Bankrate customer. Bank and thrift deposits are insured by the Federal Deposit Insurance Corp. Credit union deposits are insured by the National Credit Union Administration.

Consumer Satisfaction: Bankrate attempts to verify the accuracy and availability of its Advertisers' terms through its quality assurance process and requires Advertisers to agree to our Terms and Conditions and to adhere to our Quality Control Program. If you believe that you have received an inaccurate quote or are otherwise not satisfied with the services provided to you by the institution you choose, please click here.

Rate collection and criteria: Click here for more information on rate collection and criteria.