Enterprise solution software stocks took a hit last week following soft full-year guidance from the customer relationship management (CRM - Free Report) king, Salesforce (CRM - Free Report) . This brought down one of my favorite customer service cloud company’s, Zendesk (ZEN - Free Report) , to a level that I believe is a solid entry point. Below you can see how ZEN and CRM have been tracking with each other since the beginning of the year, ZEN tracking like a new high-beta growth stock and CRM’s steady, mature stock movements.
Zendesk is a cloud-based platform that helps businesses improve their customer experience. The company started as a customer support cloud, and now with Zendesk Sunshine, it has become a complete customer relationship management platform (CRM - Free Report) . Zendesk initially catered to growing small-to-mid-sized businesses (SMB) who are just beginning to have significant customer relations issues. Today the company services an increasing number of Fortune 500 enterprises.
The platform provides businesses with omnichannel solutions so that they can meet their customers’ needs in a way that is most convenient to the customer. Zendesk has helped connect nearly 900 million customer queries with a solution in the past year.
In this digital age we the markets have seen a plethora of CRM platforms, so what makes Zendesk worth investing in?
Zendesk focusses on ease of implementation and use, with all the sophisticated software being handled on the backend. You don’t need a professional to help integrate like you would with Salesforce.
The platform is open and cloud-based, meaning that you can access it wherever and whenever you want. It also is easily integrated into other enterprise software.
Gartner has recognized Zendesk as the Magical Quadrant leader in CRM Customer Service Centers for 3 years running. In a press release regarding this award, the firm expressed its thoughts about this award means. “With one of the fastest-growing customer bases of any vendor, Zendesk believes it was recognized for its overall value proposition, ease of set-up, usability, API integration, and rapid adoption.”
ZEN is at a solid entry point right now, as it bounces off the 50-day moving average. You can see in the chart below that these shares have used the 50-day moving average (red line) as a support level. With this positive sentiment already going into this stock and the Zacks Rank #1 (Strong Buy) rating, I think right now is a perfect time to invest in this company of the future.
The company’s balance sheet is healthy, with $427 million in cash and positive cash flows from operations that have progressively grown. Zendesk is expected to continue growing its top line by more than 30% for the next couple of years.
14 out of 16 sell-side analysts are calling ZEN a buy right now (no sell ratings), with an average price target of $195 that would represent a 28% upside.
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