RingCentral (RNG) PT Lowered to $35 at Evercore ISI

Evercore ISI analyst Peter Levine lowered the price target on RingCentral (NYSE: RNG) to $35.00 (from $37.00) while maintaining a In Line rating.

The analyst comments "RNG reported in-line Q4 results but the weak 1Q25 and CY25 outlook will weight on shares. The call provided no new information to change the existing narrative around the stock, and unfortunately, no near-term catalyst appears poised to shift sentiment. While we agree with mgmt that voice isn’t dead and RNG remains the market share leader, the hurdle for investors is justifying a terminal value for a business that has become commoditized in a flat/low-growth market. The move into CCaaS and the AI initiatives makes logical sense, but these areas are highly competitive and fragmented, with larger, better-capitalized players, and we just don’t see this narrative against RNG cooling down anytime soon. We did call out last quarter (here) that we would likely need to revise the CY25 guidance below current consensus given the potential disruptions from the fallout of the NICE partnership, and even adjusting for the 100bps FX headwind, the initial guide missed its mark. As RNG transitions away from reselling NICE, we expect ARPU and ARR to come under pressure. Commentary suggests that contact center ARR is down Y/Y and will likely remain on this downward trajectory until RNG’s own contact center product gains scale. This situation is reminiscent of what happened with Zoom a few years ago when that partnership dissolved. The light at the end of the tunnel is the progression RNG is making towards profitability and alleviate lingering concerns regarding the convert overhang. The focus remains on delivering operating leverage (150bps of leverage in CY25), improving FCF (~$500mn of FCF in CY25/~20% margins), and reducing SBC. "

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