Analyst Note| Nupur Balain |
Narrow-moat RingCentral reported strong first-quarter results that surpassed our expectations as favorable macroeconomic trends continued to propel demand for Unified Communications-as-a-Service, or UCaaS, solutions. We are raising our fair value estimate for RingCentral to $370 from $366 on the back of healthier-than-expected near-term demand. The COVID-19 pandemic has accelerated businesses' cloud-based digital transformations, enabling RingCentral to capitalize on such trends. We believe that secular tailwinds, alongside RingCentral's powerful go-to-market partner network, should allow the firm to gain higher market share and deliver decent long-term growth. With shares trading at a discount to our fair value, we currently see an attractive buying opportunity for investors.