Bandwidth (NASDAQ:BAND), DigitalOcean (NYSE:DOCN) and RingCentral (NYSE:RNG) have been downgraded by funding agency Piper Sandler on Tuesday, citing worries about future progress.
Analyst James Fish lowered his score on all three firms to impartial from obese, noting that checks in a latest CIO survey confirmed that gross sales estimates for cloud automation software program are anticipated to lower 0.6% and 1.4% in 2023 and 2024, respectively.
For Bandwidth (BAND), Fish stated catalysts reminiscent of progress in communications platform as-a-service, demand for unified communications and fixed communications, a progress trough and low valuation have “largely performed out.”
Fish additionally famous that progress is coming from “unsustainable pass-through messaging charges and political occasions” and there may be “oblique” top-line threat on account of gradual downs in seat progress from unified and fixed communications.
For Digital Ocean (DOCN), Fish famous the corporate is just not solely dealing with strain from the worldwide economic system, however there are issues that its publicity to small and medium-sized companies and builders, together with second-half pricing points and refinancing wants may weigh on the enterprise.
“In a macro-improvement situation, this could possibly be a compelling play, nevertheless we imagine shares could possibly be range-bound over the following 12 months,” Fish wrote in a notice to shoppers.
With regards to RingCentral (RNG), Fish stated that margin growth is “priced in” and there are dangers to income progress coming from partnerships.
“Additionally, RingCentral faces rising aggressive pressures, slower seat growth, a wanted refinancing of the convertible notes, and a change within the CX technique,” Fish defined. “Valuation does seem fascinating and thus limits the draw back, nevertheless we desire different ‘self-help’ tales at this time.”
Last month, Morgan Stanley upgraded RingCentral (RNG), citing “overly destructive investor sentiment.”
Analysts are largely constructive on RingCentral (RNG). It has a BUY score from Seeking Alpha authors, whereas Wall Street analysts fee it a BUY. Conversely, Seeking Alpha’s quant system, which persistently beats the market, charges RNG a HOLD.