Stephens Dishes Out Bull Ratings on ZM, WORK Stocks

Call buying has already been popular on ZM and WORK

by Josh Selway

Published on Jul 12, 2019 at 9:42 AM

Wall Street newcomers Zoom Video Communications Inc (NASDAQ:ZM) and Slack Technologies Inc (NYSE:WORK) are in focus this morning after receiving new coverage at Stephens. More specifically, the brokerage firm took a bullish view on both the shares of ZM and SLACK, giving them "overweight" designations.

Looking closer at the note, the covering analyst said that the companies are leaders in their markets given their strength in video conferencing and other collaboration tools. The timing of the note is somewhat ironic, since Microsoft (MSFT) yesterday said its Teams product has 13 million daily users -- more than Slack.

The note is also a divergence from how most analysts have been approaching the stocks, which both went public in recent months. WORK, for example, had just one bullish recommendation coming into today, and while ZM shares had four "strong buy" ratings, compared to seven "hold" or "strong sell" ratings.

Regardless, ZM shares are up 1.5% this morning at $92.80, putting them above recent resistance from the 20-day moving average. They traded as high as $107.34 back on June 20, after opening for public trading at $65 back in April.

WORK, however, is slightly lower early on, potentially because the Microsoft news is overshadowing the analyst attention. The shares were last seen at $34.94, not far from their record low of $34.46 from earlier this week. They traded up to $42 on their first day of trading in June.

To be sure, call traders have taken interest in both names already at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). Zoom has seen more than 11,200 long calls cross at these exchanges in the past 10 days, compared to just about 4,332 puts, and 7,821 calls have traded on Slack during that time, compared to 1,475 puts.

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