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Here's What Slack Analysts Say Investors Should Do Now

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Here's What Slack Analysts Say Investors Should Do Now

Slack Technologies Inc (NYSE: WORK) shares have rallied 45.5% in just over a week following the initial reports of a buyout by salesforce.com, inc. (NYSE: CRM).

On Tuesday, Salesforce confirmed a buyout deal priced at roughly $44.07 per share as of Wednesday morning’s prices.

Slack also reported an early release of third-quarter earnings numbers. Total revenue in the quarter was up 39% to $234.5 million. Slack also reported adjusted EPS of 1 cent and 142,000 paid customers, up 35% from a year ago.

Related Link: 6 Salesforce Analysts React To Slack Deal: 'Game-Changer Potential'

Voices From The Street: Following the news, Slack shares continued to trade at a slight discount to the buyout price. Several analysts have said they expect the deal to close without a hitch.

Canaccord Genuity analyst David Hynes said Slack is now an arbitrage play, and its primary price movements will be tied to fluctuations in Salesforce shares from this point forward.

“We view the acquisition as a favorable outcome for Slack holders who were constantly battling a narrative of daily active user comparisons with industry giant Microsoft Teams,” Hynes wrote.

Piper Sandler analyst Brent Bracelin said Slack investors should consider cashing out their gains and buying Asana Inc (NYSE: ANAN) instead.

“We recommend growth investors swap a portion of gains in WORK into ASAN, which we argue is uniquely positioned as an indirect beneficiary of an all-digital world with new integrations into Slack, Microsoft Teams, Zoom Video, and Jira,” Bracelin wrote.

MKM Partners analyst Rohit Kulkarni said a bidding war for Slack is unlikely given that most of the big tech companies that could afford it would face antitrust scrutiny.

“While Slack can be viewed as an attractive target to Big Tech such as Alphabet, we think the ongoing anti-trust lawsuits likely adds an incremental hurdle in getting such a large deal through the regulators,” Kulkarni wrote.

Slack Ratings, Price Targets

  • Canaccord Genuity downgraded Slack from Buy to Hold with a price target upped from $32 to $45. 
  • Piper Sandler downgraded Slack from Overweight to Neutral with a price target lifted from $36 to $45. 
  • MKM downgraded Slack from Buy to Neutral with a fair value estimate lifted from $37 to $46. 

Photo courtesy of Slack. 

Latest Ratings for WORK

DateFirmActionFromTo
Dec 2020Morgan StanleyUpgradesUnderweightEqual-Weight
Dec 2020Stephens & Co.DowngradesOverweightEqual-Weight
Dec 2020Credit SuisseMaintainsNeutral

View More Analyst Ratings for WORK
View the Latest Analyst Ratings

 

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