RingCentral (NYSE:RNG) shares rose 3% on Friday as Needham upgraded the software program firm, citing stabilizing progress and improved free money stream.

Analyst Ryan Koontz raised his score on RingCentral (RNG) shares to purchase from maintain, noting that the corporate has made “surgical” price cuts and stabilized its progress charges.

“We now see the company demonstrating its capacity to achieve 20%+ [operating margins] which should provide ample [free cash flow] to pay down its sizable debt load,” Koontz wrote. “We estimate ~$300MM/$375MM in [calendar 2024 and 2025 free cash flow] with its new debt instruments as capable of negating total debt in 2026.”

Koontz famous that he expects slowing unified-communications-as-a-service progress to permit RingCentral (RNG) to go after “low knowledge worker verticals” the place Microsoft’s (MSFT) Teams is much less prevalent.

“Together with an expanding CCaaS portfolio, we see sustained 10%+ subscription revenue growth as achievable over the medium term,” Koontz added. “Fears of declining business lines appear overblown, and the company’s early-mover strategy in AI, albeit immature in monetization, provides upside optionality.”

Analysts are largely cautious on RingCentral (RNG). It has a HOLD score from Seeking Alpha authors, whereas Wall Street analysts charge it a BUY. Conversely, Seeking Alpha’s quant system, which persistently beats the market, charges RNG a HOLD.

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