Work-From-Home Shift Draws Analysts to Slack Stock

Slack is slated to report earnings after the close on Thursday

Deputy Editor
Jun 2, 2020 at 9:56 AM
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Several analysts are raving about work-from-home staple Slack Technologies Inc (NYSE:WORK) this morning, including Cowen, which initiated coverage with an "outperform" rating and a $45 price target. The brokerage noted the recent shift to permanent remote work, sparked by stay-at-home orders,  has given Slack the opportunity to accelerate its adoption and grow its total addressable market. Wells Fargo also chimed in, lifting its price target to $41 from $30. This has helped WORK move 6% higher in pre-market trading, to $39.39 at last check. 

These bull notes come just ahead of WORK's first-quarter earnings report, which is due out after the close on Thursday, June 4. A look back at its last three post-earnings moves since going public shows just one positive return, with Slack stock averaging a next-day move of 5.6% regardless of direction. This time around, the options market is pricing in a much bigger 22.5% swing following its quarterly report. 

Speaking of options pits, there is a definite bullish bias among these traders. In the last 10 days, 57,924 calls exchanged hands, compared to just 11,679 puts during the same time period, giving WORK a 10-day call/put volume ratio of 4.96 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). 

A look back at analyst sentiment shows that there is still room for upgrades. Coming into today, 11 called WORK a "buy" or better, compared to seven handing out a "hold" or worse rating. Meanwhile, the consensus 12-month price target of $29.48 sat at a 20.7% discount to last night's close.

This sentiment is surprising, especially considering WORK's recent behavior on the charts. The stock is going on its fourth straight win today with a solid layer of support at its 20-day and 40-day moving averages just below. A more long-term look shows Slack stock climbing back toward its all-time high of $42, which it hit the day it became public on June 20. For the year, WORK is up over 65%. Plus, it just came off its biggest one-month gain on record, up 31.3% in May. 

 

 

 

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