‘Great logic’ in a RingCentral, 8×8 merger

© Reuters. ‘Great logic’ in a RingCentral (RNG), 8×8 (EGHT) merger – Craig-Hallum

By Sam Boughedda 

Craig-Hallum Capital analysts instructed traders in a word Friday that the agency believes there may be “great logic” in a RingCentral, Inc. (NYSE:) and 8×8, Inc. (NASDAQ:) merger.

The analysts have a Purchase score on each shares, with a $7 per share worth goal on EGHT and a $60 worth goal on RNG.

“We have now lengthy thought of the Unified Communications market as one that should consolidate. It has been taking place, maybe in methods which are much less logical,” wrote the analysts. “Whereas Microsoft (through Groups) and Zoom through Zoom Cellphone have grow to be related to the story, the #1 named competitor for RingCentral has remained 8×8. We’re believers that the 2 corporations would make nice sense collectively, the economics must be excellent for RingCentral as a purchaser and for 8×8 as a vendor.”

They added that the market alternative for each companies continues to be vital, with cloud adoption “nonetheless in its infancy.”

“Solely 21M seats out of ~400M have moved to cloud (~5% penetration). Combining each companies would create a powerhouse to exit and seize extra of this chance with higher unit economics and would doubtless alleviate a number of the concern that is plagued the inventory (commoditization and competitors) by the “elimination” of RNG’s prime competitor. Under, we stroll by our ideas,” mentioned the analysts.

Ring Central shares are down over 3% Friday, whereas EGHT is up round 1.68%.