Slack (WORK) is losing ground to other tech companies, according to a prominent analyst.
In a research note published on Wednesday, Morgan Stanley prognosticator Keith Weiss said that the work-from-home trend engendered by the coronavirus outbreak has provided lasting benefits to operators of remote-working tools like Microsoft (MSFT 2.88%), Zoom Technologies (ZM 5.29%), and Alphabet (GOOG 6.52%) (GOOGL 6.68%) at the expense of Slack.
Microsoft is the most-direct competitor to Slack, thanks to its Teams software, which boasts many of the functionalities of the latter's platform.
"In the Covid remote-work environment, companies looked to quickly bolster their communication and collaboration capabilities, and our survey work indicates Microsoft was ready with its 'foot in the door' in the form of more than 270 million paid Office 365 seats," wrote Weiss, differentiating between the tech giant and the communications software upstart.
"With Microsoft Teams a component of Office 365, Teams was and is easy and affordable to roll out more broadly within the existing customer base. In many cases, Slack didn't have the opportunity to properly pitch its differentiation, and in our view, the customers that have standardized on Microsoft Teams are not looking back" he added.
Meanwhile, Weiss says, Zoom continues to be the communications software of choice for managers requiring a different form of office collaboration: face-to-face meetings. Alphabet/Google also offers a variety of relatively easy-to-use office team tools.
For these reasons, Weiss downgraded his recommendation on Slack stock to underweight from the previous equal weight, and set his price target to $27 per share.
Slack shares fell by 6.3% on Wednesday in the wake of the analyst report, closing at $28.87.