In a report released yesterday, Meta Marshall from Morgan Stanley maintained a Hold rating on RingCentral (RNG – Research Report), with a price target of $29.00.
Meta Marshall has given his Hold rating due to a combination of factors influencing RingCentral’s current market position. Despite some positive developments, such as the traction with new products like AIR and the achievement of a $100 million ARR target by the end of 2025, these are not substantial enough to drive significant stock growth at present. The company’s focus on voice services in consumer-facing verticals, such as healthcare and retail, presents opportunities, but the long-term growth potential of cloud telephony remains uncertain.
While the company has shown strong gross retention across all customer cohorts and operational improvements in the SMB segment have led to better retention, macroeconomic concerns related to the SMB customer base, which constitutes a significant portion of revenue, pose risks. Additionally, although ARR growth outpaced subscription revenue growth, the absence of a clear catalyst for substantial growth in the near term justifies a more cautious outlook, resulting in a Hold rating.