New Slack Bulls Cite Its Potential to ‘Severely Displace Email’

(Bloomberg) -- Slack Technologies Inc. added three new bulls as hopes are high for the company that makes software for workers to chat and collaborate on projects.

“Slack will replace or severely displace email over the next several years,” William Blair analyst Bhavan Suri wrote. “Unlike email, Slack has been purposefully architected to support integrations with other software applications and is designed to foster collaborative team communication.”

Barclays and Canaccord also started coverage of the company that opted for a direct listing on the New York Stock Exchange. By doing so, Slack bypassed the usual fundraising process of an initial public offering and allowed shareholders to sell right away without a lockup period. The shares climbed as much as 3.6% on Monday after falling in six of the prior seven sessions.

William Blair sees the addressable market near $46 billion, much higher than the $28 billion that the firm said the company is projecting. Suri sees a high growth rate over the next several years.

Slack’s product offers workers another tool that may boost productivity, wrote Raimo Lenschow at Barclays, who set a Street-high $45 target on the stock. The potential is enormous if the company succeeds in supplanting email as the dominant way to interact.

“If successful, this would create a new, very large market (millions of email users) enabling Slack to be one of the very large, future software leaders -- hence our excitement on this name,” Lenschow said.

Meanwhile, Canaccord analyst Richard Davis called Slack’s real-time chat engine “the most advanced, easiest to use and most integrated to other applications” in the market.

Slack now has six buys, two holds and no sell ratings, with an average price target of $40, according to data compiled by Bloomberg. The shares have fallen about 10% since their first-day pop.

To contact the reporter on this story: Derek Hall in Chicago at dhall129@bloomberg.net

To contact the editors responsible for this story: Catherine Larkin at clarkin4@bloomberg.net, Will Daley

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