Zendesk Stock Tumbles On Momentive Deal, Analyst Downgrades 2021

Investing.com — Zendesk Inc (NYSE:ZEN) stock fell Friday after the company revealed on Thursday evening that it will acquire Momentive Global Inc (NASDAQ:MNTV) in a deal valued at around $4 billion.

In response, a number of analysts reduced price targets and downgraded Zendesk stock.

Momentive shareholders will receive 0.225 Zendesk shares for each share of Momentive they own, equating to a total value of around $4.1 billion based on Thursday’s closing price.

The companies expect to close the transaction in the first half of next year. Zendesk said it expects the deal to be boost growth in the first full operating year. Momentive, which changed its name from SurveyMonkey back in June, is expected to help speed up Zendesk’s revenue plan to $3.5 billion in 2024.

Reacting to the news, Jefferies downgraded Zendesk shares to hold from buy, cutting the price target to $120 from $175.

Oppenheimer downgraded Zendesk to perform from outperform.

Bank of America downgraded the stock to neutral from buy.

Craig-Hallum Downgraded Momentive to hold from buy with a $28 price target. They also lowered Zendesk’s price target to $150 from $185, maintaining a buy rating.

Meanwhile, Morgan Stanley analyst Stan Zlotsky lowered Zendesk’s price target to $135 from $185, saying that the “large and unexpected deal for a slower growth” company overshadowed its Q3 results, which came in above expectations.

Zendesk’s stock hasn’t performed well 2021, currently in the red, down around 30% for the year based on its current $100.96 price at the time of writing.

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