© Reuters. RingCentral, Inc. (RNG) Well-Positioned to Increase Profitability – BofA
By Sam Boughedda
BofA analysts said in a note to clients on Monday that RingCentral, Inc. (NYSE:) has room to cut expenses and increase profitability. They currently have a Buy rating on the stock but cut the price target to $90 per share from $110.
They told investors that the firm believes RingCentral is well-positioned to reduce expenses and increase profitability while maintaining healthy revenue growth.
Despite declining over 81% in 2022, RingCentral shares gained over 7% Monday.
“Based on investor conversations we believe the RNG bear case is based, in part, on the view that RNG has a principal/agent problem. We believe a right sizing of expenses could be good for RNG equity value as markets currently favor shorter duration equity stories over out-year free cash flow promises,” explained the analysts.
Recent management changes and commentary support BofA’s view that RingCentral could take a fresh look at expense ratios and spending priorities claimed BofA.
“We reiterate our Buy rating, lowering our PO to $90 (from $110) based on a target EV/Revenue multiple of 4.2x (prior 4.9x) our CY23 estimate. We lower our target multiple based on continued multiple compression across the software and UCaaS peer group,” the analysts stated.
Be the first to comment