Zendesk Jumped 5.6% on Wednesday; Here’s Why

Customer support services provider Zendesk, Inc. (NYSE: ZEN) is in talks to reach a settlement with Jana Partners, an activist investor with a nearly 2.5% stake in the company, The Wall Street Journal stated in a report, citing people familiar with the matter.

The discussions involve the resignation of Mikkel Svane as Zendesk’s CEO as well as the removal of Carl Bass from the board. However, a few people said that the top executives could still be retained.

New York-based investment management firm Jana Partners has been agitating against the company’s planned acquisition of experience management company Momentive Global for around $4.1 billion.

Meanwhile, Zendesk has decided to stay independent and end its strategic review after conducting takeover talks with private equity firms since the beginning of this year.

About Zendesk

San Francisco-based Zendesk provides companies customer communication services through its platform. Its software-as-a-service product also offers sales and customer support services. The company has more than 160,000 paid accounts and a workforce of more than 6,000 people.

Price Target

Based on three Buys and eight Holds, the stock has a Moderate Buy consensus rating. ZEN’s average price target of $122.89 implies 104.2% upside potential from current levels. Shares have lost 56.7% over the past year.

Hedge Funds’ Activity

TipRanks’ Hedge Fund Trading Activity tool shows that the confidence in Zendesk is currently Very Positive, as the cumulative change in holdings across all 13 hedge funds that were active in the last quarter was an increase of 2.2 million shares.

Conclusion

Once the news of the settlement talks became public, ZEN stock rose 5.6% on Wednesday to close at $60.19. Shares of the company gained another 0.5% in the extended trading session to end the day at $60.46.

Now that the company has ended its strategic review and could reach a settlement with Jana, it can concentrate on its growth plans.

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