Ooma’s Promising Growth and Strong Financial Performance Justifies Buy Rating

William Blair analyst Arjun Bhatia has reiterated their bullish stance on OOMA stock, giving a Buy rating yesterday.

Arjun Bhatia has given his Buy rating due to a combination of factors that highlight Ooma’s promising financial performance and strategic growth initiatives. The company’s first-quarter results exceeded expectations slightly, with revenue aligning with forecasts and both operating and EBITDA margins surpassing them. This performance was supported by the growth in AirDial installations, which contributed significantly to product revenue.
Additionally, Ooma’s net revenue retention (NRR) improved by 1% to reach 99%, indicating strong customer retention and demand in key business areas such as 2600Hz. Despite some challenges like seat churn from IWG, the company maintained its full-year revenue guidance, reflecting confidence in its growth strategy. Ooma’s shares are trading at a slight premium compared to its peers, but with ongoing execution of its growth strategy, increased Pro and Pro Plus user base, and synergies from the 2600Hz acquisition, the stock is expected to align more closely with its industry counterparts.

In another report released yesterday, Benchmark Co. also maintained a Buy rating on the stock with a $20.00 price target.