By Sam Boughedda
Piper Sandler analysts downgraded Bandwidth (NASDAQ:BAND), DigitalOcean Holdings Inc (NYSE:DOCN), and RingCentral, Inc. (NYSE:RNG) from Overweight to Neutral in a note to clients on Tuesday.
The analysts raised Bandwidth's price target to $25 from $18 per share, cut DigitalOcean's price target to $30 from $39, and maintained Ringcentral's price target at $39 per share in the note.
On BAND, the analysts wrote that the firm's prior thesis has largely played out, while they also believe the company's growth today is "primarily coming from unsustainable pass-through messaging fees and political events, with messaging fees hindering GPM expansion."
For DigitalOcean, they explained that the firm has "rising concerns with the company's SMB and developer exposure (esp. for web-hosting use cases), 2H23 pricing & Cloudways anniversary, refinancing need, and competitive positioning across product portfolio, geo-availability, and pricing."
"In a macro-improvement scenario, this could be a compelling play, however we believe shares could be range-bound over the next 12 months," they added.
Finally, on RingCentral, the analysts stated that given where shares are today, they believe the 2023-2024 margin expansion is priced in, while "top-line estimates have risk that partially stem from the partnerships."
"Additionally, RingCentral faces increasing competitive pressures, slower seat expansion, a needed refinancing of the convertible notes, and a change in the CX strategy," argued the analysts.