Vonage Holdings shares are down 3.9% YTD. Should I invest?

Vonage Holdings (NASDAQ: VG) shares have weakened 3.9% since the beginning of January 2021, and the current share price stands around $12.3. Morgan Stanley maintains an “equal weight” rating on Vonage Holdings with a $13 price target, while J.P Morgan reported that it is still waiting for business improvements.

Fundamental analysis: Morgan Stanley maintains an “equal weight” rating on Vonage Holdings with a $13 price target

Vonage Holdings Corp was founded in 2001 as a provider of residential telecommunications services while today operates as a cloud communications provider. Vonage Holdings shares remain under pressure after some analysts said it might take several quarters to improve tangible business.

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Vonage reported Q4 results in February; total revenue has increased by 4.3% Y/Y to $323M while Q4 GAAP EPS was -$0.06 (missed by $0.05). Total revenue has increased above expectations (beats by $7M) but still not enough, according to some analysts, while adjusted EBITDA was $48M.

“We remain well-positioned with, global scale and a diverse customer set, across the world in multiple industries including health care, education, gaming, social, and virtual events, providing a broad-based balanced growth trajectory. 2021 will be a year of execution and targeted growth as we further invest in our product development and a tailored go-to-market so we can provide our customers with the communication solutions that best fit their need and win a disproportional share of the market,” said Rory Read, Chief Executive Officer of Vonage.

J.P Morgan downgraded Vonage Holdings from “buy” to “hold” last month and assigned a price target of $13.5. J.P Morgan reported that it is still waiting for improvements after some weak execution in the past.

Morgan Stanley maintains an “equal weight” rating on Vonage Holdings with a $13 price target. This stock is still risky, Vonage has a relatively large debt of $506M, and maybe it is not the right moment for investing in shares of this company.

Technical analysis: Vonage Holdings shares continue to trade above the $12 support level

Vonage Holdings shares are currently trading above the $12 support level, and if the price jumps again above $13, it would be a signal to trade shares, and the next target could be around $14. On the other side, if the price falls below the $11 support level, it would be a firm “sell” signal, and the next target could be around $10.

Summary

Vonage Holdings shares remain under pressure after some analysts said it might take several quarters to improve tangible business. Morgan Stanley maintains an “equal weight” rating on Vonage Holdings with a $13 price target, and maybe it is not the right moment for investing in shares of this company.