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A deal for Zoom Video Communications to buy Five9 fell apart earlier this year.

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Five9

shares won an endorsement from Morgan Stanley analyst Meta Marshall, who raised her rating on the cloud-based provider of call-center software to Overweight from Equal Weight, keeping her price target at $200. The stock closed Friday at $153.96.

As laid out in detail in the latest Tech Trader column in Barron’s, Five9 (ticker: FIVN) shares remain about $20 below where they were before


Zoom Video Communications

(ZM) attempted to buy the company earlier this year in an all-stock deal initially valued at about $200 per Five9 share. The deal fell apart as Zoom’s share price tumbled in response to a slowdown in its core videoconferencing business.

Marshall wrote in a research note Monday that Five9’s growth prospects are “unhampered” by the unraveling of the deal with Zoom. The analyst said her previous thesis on the stock focused on the company’s position in the large and expanding market for contact-center software as a service, where growth has accelerated as a result of a digital transformation of the segment post-Covid.

She remains upbeat about the outlook, but cautioned that there are some near-term headwinds, including the aggressive growth model laid out in the proxy materials for the Zoom deal. Five9 projected sales of $1.9 billion in 2025 and $5.2 billion in 2031, up from around $600 million this year.

Marshall also said the probability of “strategic interest” in Five9 is now lower. In fact, CEO Rowan Trollope told Barron’s last week that the company isn’t seeking to find a buyer.

Still, Marshall said, the stock’s current valuation provides an attractive entry point. An analyst meeting scheduled for November could be a catalyst for gains in the stock, she said, arguing that Five9 remains “the best pure-play in an attractive market.” She noted that competition is heating up, but said an upbeat analyst day should counterbalance concerns on that front.

Late Monday morning, Five9 shares were down a few pennies at $153.88.

Write to Eric J. Savitz at eric.savitz@barrons.com

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