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Why RingCentral Stock Jumped 11.2% on Tuesday

By Joe Tenebruso - Jul 30, 2019 at 8:33PM

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The communication solutions provider is growing at an impressive clip.

What happened

Shares of RingCentral ( RNG -2.53% ) popped more than 11% on July 30, after the cloud-based communications software company announced strong second-quarter results and received an analyst upgrade.

So what

RingCentral's revenue surged 34% year over year to $215 million. The company is successfully wooing new subscribers for its voice, video, messaging, and contact center solutions.

A person pointing to an upward-sloping digital chart.

RingCentral delivered solid sales growth in the second quarter. Image source: Getty Images.

Meanwhile, the company's non-GAAP (adjusted) earnings per share rose 11% to $0.21. That was significantly above Wall Street's expectations for adjusted EPS of $0.16.

Based on these results and current trends, RingCentral boosted its full-year financial outlook. The company now expects revenue to increase 30% year over year to between $874 million and $877 million, up from prior guidance of $862 million to $866 million. Management also raised its adjusted earnings target to a range of $0.77 to $0.79, up from $0.71 to $0.75.

Now what

Following its Q2 results, RingCentral received some positive analyst commentary. Raymond James analyst Brian Peterson reiterated his strong buy rating on the stock and increased his price target from $140 to $175. 

Peterson believes that the market does not yet appreciate RingCentral's long-term growth potential, particularly in the enterprise communications market. Judging by the stock's recent gains, investors appear to agree.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

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Stocks Mentioned

RingCentral, Inc. Stock Quote
RingCentral, Inc.
$193.65 (-2.53%) $-5.02

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