Slack initiated at outperform at Cowen

Yahoo Finance’s Brian Sozzi, Alexis Christoforous, and Ines Ferre break down the market action for Slack.

Video Transcript

BRIAN SOZZI: Let's take a look at another company we're watching closely on YahooFinance.com. That is Slack. Let's bring Ines Ferre here. Ines, pretty big week it's turning out to be for Slack. Slack co-founder Stewart Butterfield putting out a lot of tweets over the past few days on the civil unrest. And the company reports earnings Thursday night.

INES FERRE: That's right. And Cowen has an estimated coverage of slack with an outperform rating of $45 price target. Right now the shares are trading below $37. And the analysts note basically saying that this shift of working from home has given slack a major booster shot to its market app that will accelerate adoption and lift the TAM, total addressable market.

Now, also the analysts say we think COVID-19 and work from home is acting as a major catalyst for market demand for customer adoption for Slack. And also the analysts saying, we think that the Microsoft threat is overblown. And we would argue that as digital collaboration becomes more strategic, companies will gravitate toward towards best of breed.

It also highlights that Slack integrates and connects over 2,000 applications. Now what investors will be paying attention to when Slack reports earnings on Thursday after the bell, of course, is the amount of paying customers that it has been able to acquire. Now back in March in an FTC filing, the company said that it had gained 7,000 new paid customers from February 1 to March 18 during COVID-19 and you can see that the stock has really rallied over the last couple of months. But certainly, paying customers is something that investors are going to be paying attention to. Brian.

BRIAN SOZZI: Hey, got to get paid, got to make that paper.

INES FERRE: Right.

BRIAN SOZZI: Thanks so much. Thanks so much, Ines.