Slack Technologies (WORK) – Get Report leaped after RBC Capital Markets analysts started coverage of the collaboration-tools provider with an outperform rating and a $25 price target.
At last check, Slack shares traded at $23.09, up 10%.
The San Francisco company went public last June 20 in a direct listing, with a starting reference price of $26. In its first day of trading the stock moved as high as $42. It traded below $20 in November.
The RBC analysts, led by Alex Zukin, in a report lauded Slack for its “leading brand, differentiated technology, and strong tailwinds from a growing workplace-collaboration market.”
Some analysts and investors have shrugged off Slack as just another messaging service amid a sea of competitors. The RBC analysts don’t see it that way.
“While the simplistic take on Slack is that it is ‘just another workplace chat tool,’ … the vision around becoming the primary system of engagement for all employees inside (and increasingly outside) an organization creates a positive data-feedback loop,” the analysts said.
That loop consists of “more engagement, more data, more insights to drive better results, and significant long-term value,” Zukin and his team wrote.
The messaging market could grow to $86 billion, the analysts estimate. Slack “is the leader in this space from both a brand and feature/functionality perspective,” they said. It “remains in an early growth phase with a defensible competitive position and significant monetization potential.”
All Slack has to do is attract more than 50% of developers, and its revenue can easily double over the next few years, the RBC analysts maintain.
