RingCentral, Inc. (RNG) shares briefly rose to retest highs on Tuesday before giving up ground later in the session. The initial move higher came after Rosenblatt analyst Ryan Koontz raised his price target from $270 to $315 and reiterated a Buy rating on the stock following a conversation with the company's chief strategy officer. The analyst believes that the Avaya partnership appears to be progressing on track.
Last year, RingCentral announced a partnership with Avaya to become an exclusive provider of Unified Communications as a Service (UCaaS). In February, the partnership announced an all-in-one cloud-based solution for voice, team messaging, meetings, video conferencing, collaboration, and more.
The company has also experienced tailwinds from the work-from-home movement driven by the COVID-19 pandemic. As businesses transition to cloud services, RingCentral's unique platform and Avaya-driven UCaaS service could see a 7% compound annual growth rate (CAGR) over the next few years, according to KeyBanc analysts.
The company reported a 32.8% increase in revenue during the first quarter, beating consensus estimates by $10.59 million, while non-GAAP EPS came in at 19 cents, which was one cent better than expected. However, second quarter revenue guidance was slightly below consensus, with in-line EPS expectations.
From a technical standpoint, RingCentral stock continues to trend near its prior highs and trendline resistance at $292.48. The relative strength index (RSI) appears neutral with a reading of 57.33, and the moving average convergence divergence (MACD) continues to trend higher. These indicators suggest that the stock has more room to run over the coming sessions.
Traders should watch for a breakout from prior highs and trendline resistance at $292.48 over the coming sessions toward trendline resistance at $309.00. If the stock breaks down, traders could see support near the 50-day moving average and trendline support levels at around $256.83, although the overall trend remains bullish at the moment.
The author holds no position in the stock(s) mentioned except through passively managed index funds.