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The development of Zoom Reporting on an email service would pit it against Microsoft and Google players. DA Davidson analyst Rishi Jaluria is bullish on Zoom movement.
A dream time
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Yesterday, that information was revealed
Zoom video communication
(ticker: ZM) has started work on web-based email, calendar and directory services, steps that would put the company in more direct competition with
Microsoft
(MSFT) and
Alphabet‘s
(GOOGL) Google, among other players in the increasingly crowded market for communication software tools. Zoom is gradually adding new products to their flagship video conferencing offering – but email would be a huge leap into established business with established players, notably Microsoft Exchange and Outlook and Google Gmail.
DA analyst Davidson Rishi Jaluria writes in a research note Thursday that Zoom’s move to email in particular “makes a lot of sense.” He believes the pendulum is moving backwards towards software resources and away from “best” individual products as buyers try to persuade sellers.
“We are seeing a combination of communication tools in the workplace and it would make sense for Zoom to add activity for real-time email and messaging as part of the existing platform, ”He writes, noting that there have been previous reports that the company is rolling out its move to collaborative communications devices such as
Slack Technologies
(WORK).
Jaluria is less certain about the company’s ability to move into address services, in which it would compete with Okta (OKTA) and Microsoft Azure Active Directory – tools that make it easy for companies to manage email and other services. . “We see this as less obvious and would prefer Zoom to be integrated into content management or CCaaS (contact center as a service),” he writes.
Jaluria also claims that Zoom had about $ 1.9 billion in cash – and could use cash or equity to acquire ownership in related product areas.
“The biggest takeaway, in our view, is that Zoom is proactively investing in new growth opportunities as we enter a post-distribution world,” he writes. “It would be easier for Zoom to lie to the landlords, but the company is making the right investment to grow its footprint and add more value to customers (with the chatat that this is effective while Zoom keeps investing strongly in the underlying platform). ”
Jaluria maintains its bullish stance on the stock at a time when investors are waiting – Zoom shares have fallen about 35% over the past two months amid concerns about how will affect the company’s growth rate as the economy reopens in 2021.
“We believe in: the future of our work has inevitably changed,” he writes. “We will enter a hybrid future, where staff will work from the office 3-4 days a week and remote the next 1-2 days; and Zoom is an essential part of enabling that hybrid work in the future. Zoom remains one of our favorite names to head to 2021.
He believes the sellloff has recently created a buying opportunity, reiterating its Buy rating and the $ 600 target on Zoom stock.
Zoom stock is down 1.1% to $ 379.50 in Thursday trading.
Write to Eric J. Savitz at [email protected]