Barclays cuts RingCentral stock rating on limited upside, competition
Jan 27, 2025

Investing.com -- Barclays (LON: BARC ) downgraded Ringcentral Inc (NYSE: RNG ) to "Equal Weight" from "Overweight" as it also lowered its price target to $37 from $45, given limited growth prospects through 2025 amid intensifying competition and weaker demand for its full collaboration solution.

Analysts noted mounting competitive pressure from Microsoft (NASDAQ: MSFT ) Teams and Zoom (NASDAQ: ZM ), along with slower growth in the Unified Communications as a Service market. Additionally, Barclays noted channel friction among RingCentral’s largest partners, with one reporting flat bookings growth for 2024.

Demand for RingCentral’s full solution of phone, video, and chat remains limited, with growing preference for voice operators via Microsoft’s Operator Connect, where RingCentral is not a partner.

Barclays expects these challenges to constrain revenue growth.

“We believe RNG could underperform SaaS peers in 2025 as we believe there is less upside to 2025 Street numbers as RNG's collaboration market would be a lower priority add in an improving macro and since RNG faces stronger Zoom/Teams competition.” Barclays added.

Shares of RingCentral have struggled in 2024, reflecting concerns over slowing growth and heightened competition in the collaboration and communications space.