Shares of Docusign, Twilio and Zendesk have soared in the COVID-19 crisis — and they’ll likely continue rallying, according to a JMP Securities analyst who has a ‘buy’ rating to the stocks (ZEN, TWLO, DOCU)

  • The pandemic and the shift to remote work lifted the shares of tech companies that offer work-from-home tools.
  • A JMP Securities analyst says three stocks — Docusign, Twilio and Zendesk — are poised to continue rallying, given their market momentum.
  • In a note to clients, JMP’s Pat Walravens pointed to Docusign, Twilio and Zendesk as the tech names “where we currently have data points suggesting strong business momentum and where we see upside.”
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The sharp pivot to remote work sent the shares of so-called work-from-home tech companies soaring over the past few months.

And three of them — Docusign, the cloud e-signature company, communications platform Twilio, and Zendesk, the cloud customer service application — are likely to continue rallying, a Wall Street analyst said Tuesday.

“The pandemic drove outsize investments in technology to enable effective remote work and to enable businesses to go back to work safely,” JMP Securities analyst Pat Walravens told clients in a note.

These investments have benefitted tech companies offering tools that have helped businesses adapt quickly to the COVID-19 crisis, helping propel a tech market rally over the past four months. The tech-heavy Nasdaq Composite Index has climbed more than 50% since late March when the crisis escalated.

But Walravens pointed to Docusign, Twilio and Zendesk as the tech names “where we currently have data points suggesting strong business momentum and where we see upside,” he wrote.

JMP sets aggressive price targets on DocuSign, Twilio, Zendesk

Walravens has a “market outperform,” or buy, rating on the three stocks.

He set a price target of $233 for Docusign citing the San Francisco-based company’s solid market gains. Docusign has seen its shares have risen 160% to $198 since the beginning of the year.

“We hear that DocuSign is ‘continuing to crush it,’ is in ‘just so many deals,” and that the ‘market is so hot right now,'” Walravens wrote, citing unnamed industry sources. 

Walravens recently boosted his target price for Twilio from $243 to $260, citing the rave reviews the communications platform — which helps developers build apps that can make and receive phone calls and send text messages — has received from industry sources. Twilio’s stock has climbed more than 140% to $251 year-to-date.

“One industry source commented, ‘They are killing it,'” Walravens wrote. “A technology industry veteran explained, ‘they have effectively established themselves as the standard of messaging and telephony.'”

Twilio is so well-regarded in the market that the company has enjoyed a strong position in deal negotiations, he said.

“Our checks suggest Twilio has pricing power, including one instance where we were told the procurement officer at a new customer was disappointed because he “couldn’t get his price” – yet the customer went forward with Twilio regardless,” Walravens said.

Walravens also hiked his price target for Zendesk from $90 to $103, citing eight instances where the Zendesk sales team “exceeded second quarter 2020 internal goals.” Zendesk shares are 23% at $96 year-to-date.

He also cited reports of a major Zendesk customer win with “a multi-billion-dollar gaming company that developed and owns one of the world’s most popular online video games.”

Walravens also praised Zendesk’s leadership: “We continue to like Zendesk and the leadership of its thoughtful and forward-looking CEO Mikkel Svane, who wants customers to understand how the business world has changed and why it needs a new generation of customer relations management software.”

Got a tip about Zendesk, Twilio or Docusign or another tech company? Contact this reporter via email at bpimentel@businessinsider.com, message him on Twitter @benpimentel or send him a secure message through Signal at (510) 731-8429. You can also contact Business Insider securely via SecureDrop.

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