RingCentral slips as BTIG downgrades in the face of increased competition from Microsoft, Zoom

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Center Ring (New York Stock Exchange: RNG) shares fell on Tuesday as investment firm BTIG downgraded the cloud communications and collaboration software company, noting it is expected to face increased pressure from Microsoft (NASDAQ: MSFT) and Zoom video communications (NASDAQ:ZM) and potential headwinds in the global economy.

Analyst Matt VanVliet downgraded his rating on RingCentral (RNG) shares to Neutral on Buy, pointing out that the company’s position in the space is “challenged” by other companies that are more aggressive with their prices and offer customers “lucrative opportunities” to move. away from the Ring’s ecosystem.

“This round of verification was by far the least positive around RingCentral and seems like a dramatic change from earlier this year when partners were still very much aligned with RNG as the best partner to work with on many levels. “, VanVliet wrote in a note to clients.

Shares of RingCentral (RNG) fell 2.6% to $33.40 in premarket trading.

The analyst explained that companies like Microsoft (MSFT) and Zoom (ZM) are putting pressure on Ring’s business model, especially with Microsoft (MSFT) paying vendors more than Ring in many cases, driving them away from RingCentral ( RNG).

“This change results in reduced demand for the RNG platform,” VanVliet explained, while adding that Zoom (ZM) competes on price and gets low-margin deals that Ring (RNG) “would otherwise in a competitive position to win.”

VanVliet also noted that conversion growth is slowing, which should limit growth next year as potential customers who need to renew do not consider RingCentral (RNG) for their services due to price. Increasingly, these customers, including some that already operate on multiple platforms, are “consolidating” around Microsoft (MSFT) or Zoom (ZM).

In August, hedge fund Coatue Management revealed that it had more than doubled its stake in RingCentral (RNG) during the second quarter, while making several other changes to its portfolio.

Analysts are largely cautious on RingCentral (RNG). He has a HOLD note from the authors of Seeking Alpha, while Wall Street analysts give it a TO BUY. Additionally, Seeking Alpha’s consistently market-beating quantitative system rates RNG as a HOLD.

Martin E. Berry