Vonage (VG) PT Raised to $9 at Needham & Company
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Needham & Company analyst Richard Valera reiterated a Buy rating and raised his price target on Vonage (NYSE: VG) to $9.00 (from $8.00), saying the newly launched API should drive growth and GM improvement for Nexmo.
Valera commented, "With the launch of its new voice API in its Nexmo business earlier this month, VG has delivered on the next step of its plan to increase the TAM and margins of its recently acquired Nexmo--making it more like the business of market leader Twilio. While we expect it will take some time to ramp this higher margin revenue stream, we believe the company's strong brand, enterprise sales force and technology should enable this new product to become a meaningful driver of the company's revenue in 2017 and beyond. We maintain our Buy rating while increasing our PT to $9 (was $8) as we increase the multiple applied to the Nexmo portion of VG's business in our sum-of-parts analysis from 3.5x to 4.5x to reflect a higher peer multiple and a slightly de-risked outlook for Nexmo."
Shares of Vonage closed at $6.65 yesterday.
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