RingCentral Slips After Analyst Downgrades Stock Amid Concerns Over Lack Of Near Catalysts
Raymond James’ Brian Peterson said he still believes RingCentral offers a positive risk-reward for investors, with an attractive free cash flow valuation.
FollowRingCentral, Inc. ($RNG) stock fell sharply in Friday’s premarket trading after an analyst downgraded the stock of the cloud-based communications software and services provider.
Raymond James analyst Brian Peterson downgraded RingCentral stock to ‘Strong Buy’ from ‘Outperform’ and reduced the price target from $50 to $45, TheFly reported.
The analyst action comes as he repositioned several ratings throughout the application software sector at the start of 2025.
Peterson said he still believes RingCentral offers a positive risk-reward for investors, with an attractive free cash flow valuation. However, he said valuations of unified-communications-as-a-service providers have lagged the applications software group for several years.
The analyst sees no near-term catalyst to close the valuation gap versus peers.
Peterson also flagged likely volatility in RingCentral shares ahead of the announcement of the initial 2025 guidance.
In mid-December, Mizuho Securities downgraded RingCentral stock to ‘Neutral’ from ‘Outperform,’ with a price target of $42.
Analyst Siti Panigrahi said the company’s decision to prioritize its internally developed contact center as a service solution for small businesses casts cloud on its partnership with Israeli cloud platform provider Nice Ltd. ($NICE). He sees this posing risks to the 2025 subscription revenue growth estimate.
Also, the analyst expressed concerns about the absence of any catalysts for revenue re-acceleration.
RingCentral stock, up 3.1% in 2024, ended Thursday’s session down 0.51% at $34.83.
In premarket trading, the stock was slipping 2.10% to $34.10 as of 7:14 a.m. ET.
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