Robert W. Baird analyst William Power has maintained their neutral stance on RNG stock, giving a Hold rating on November 4.
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William Power has given his Hold rating due to a combination of factors impacting RingCentral’s financial outlook. The company’s Q3 results were solid, with subscription revenue slightly exceeding expectations and a strong adjusted operating margin. However, the guidance for Q4 revenue was slightly below prior estimates, primarily due to foreign exchange impacts, which led to a slight reduction in full-year subscription revenue guidance.
Additionally, while there is positive momentum from the company’s AI product contributions, they are not yet sufficient to counteract the pressures on the core UCaaS business. The deceleration in annual recurring revenue growth, particularly in the enterprise segment, also presents a challenge. Despite these concerns, the company demonstrates strong free cash flow production, which is a positive aspect. Overall, stabilizing and improving revenue growth will be crucial for regaining investor confidence, justifying the Hold rating.
In another report released on November 4, Morgan Stanley also maintained a Hold rating on the stock with a $31.00 price target.