Several Analysts Upgrade Five9 (FIVN) Stock After Zoom (ZM) Merger Termination, Which Yielded 'Fresh Buying Opportunity'

October 1, 2021 10:57 AM EDT
Get Alerts FIVN Hot Sheet
Price: $161.43 +0.63%

Rating Summary:
    17 Buy, 9 Hold, 1 Sell

Rating Trend: Up Up

Today's Overall Ratings:
    Up: 16 | Down: 18 | New: 32
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After Zoom Video Communications (NASDAQ: ZM) and Five9 (NASDAQ: FIVN) announced yesterday they are mutually terminating their merger agreement, at least 6 Wall Street analysts moved to upgrade shares to Buy or equivalent.

These upgrades came after Piper Sandler and Needham upgraded the Five9 stock in September.

Canaccord Genuity analyst upgraded shares to Buy and left the $200.00 per share price target unchanged. The analyst said that the failure merger represents a buying opportunity as “the implied post-announcement value of FIVN is below its intrinsic value.”

“We continue to believe Five9’s fundamentals remain strong, with digital transformation tailwinds, continued product innovation, large customer momentum, channel and international expansion, partnership traction, strong direct sales execution, and a still underpenetrated TAM all contributing to sustainable 30%+ revenue growth going forward. Based on the revenue projections released in Five9’s August 26 proxy statement, which calls for $833M in CY2022 revenue along with 37% y-o-y growth, we believe FIVN is deserving of a mid-to-high teens revenue multiple, which corresponds with our unchanged price target of $200,” the analyst said in a client note.

Similarly, Wells Fargo analyst Michael Turrin maintained the prior $200.00 price target and upgraded shares to Overweight.

“We see mixed near-term impacts to Five9 shares as a result (including likely investor concerns around peak growth/tougher 2H comps ahead, potential for execution impacts on Q3 results, & a reduction in FIVN's perceived M&A premium), but remain longer-term believers in the secular shift towards cloud-enabled contact center technology, Five9's competitive positioning, and the durability of the growth curve ahead (as tactical xes turn to strategic contact center transformations),” Turrin wrote.

“FIVN shares are currently trading at 17.5x EV/S on NTM est. Our $200 PT (unchanged) implies 16.5x EV/S on our Fwd NTM estimates (those in 5-8 qtrs), which we view as conservative, given FIVN's track record of consistent out-performance and ongoing evidence that a favorable multi-year transformation is taking shape in this market.”

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