The world’s favorite video conferencing software, Zoom Video Communications, Inc. (ZM) proves its mettle in scalability again, this time with the definitive acquisition of cloud contact center firm Five9 (FIVN). The acquisition is expected to pair well with Zoom’s communication platform, particularly with its Zoom Phone service.
Analyzing the news is Ittai Kidron of Oppenheimer & Co,. who wrote that the deal will help expand Zoom’s total addressable market with Five9’s loyal customer base. He asserts that Five9 will be “a good strategic fit that ultimately accelerates Zoom’s value as a broad communication vendor.”
Kidron reiterated a Hold rating on the stock, and did not declare a price target.
The five-star analyst did admit that the contact center market is “large… and crowded” with heavy competition, and that the road ahead will not be paved with easy wins. While Kidron is optimistic that Zoom could eventually execute and gain meaningful market share, it is still going up against the likes of Cisco, Amazon Web Services, and Twilio.
Five9 is a publicly traded company, and as such each stockholder will receive 0.5533 shares of Zoom for each share they own. The transaction will amount to about $14.7 billion, and will finalize in the first half of FY22.
It is possible that Zoom foresaw enterprise challenges ahead, and as such sought after a policy of merging and acquiring other established entities in order to overcome certain hurdles, Kidron surmised. He elaborated that “Five9’s selling/go-to-market motion reaches a new and different buying center than Zoom currently reaches with its Zoom Meetings base (video) and growing Zoom Phone (voice) expansion.”
On TipRanks, ZM has an analyst rating consensus of Moderate Buy, based on 9 Buy and 11 Hold ratings. The average Zoom price target is $421.33, reflecting a potential 12-month upside of 18.95%. ZM closed trading Monday at a price of $354.20.
Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
