(Bloomberg) -- Slack Technologies Inc. gained its first buy rating ahead of Thursday's trading debut as Atlantic Equities said the adoption of the company's messaging technology within businesses is proving as viral as WhatsApp has been for consumers.
Slack's user numbers could grow to more than 50 million by 2025 from about ten million at the end of January 2019, Atlantic Equities's Dimitri Kallianiotis wrote in a note. This would still represent only a fraction of the total addressable market, considering that Microsoft Corp.'s Office software has over 250 million users, the analyst said.
Kallianiotis initiated coverage at overweight, with a $37 price target that suggests 42% upside from the $26 a share reference price set by the New York Stock Exchange Wednesday, ahead of Thursday's direct listing.
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Slack is well positioned to emulate China's WeChat, which has leveraged its user engagement to become the app through which Chinese consumers access other apps, buy goods and pay their bills, he added.
Atlantic Equities is the second broker to start coverage on Slack after D.A. Davidson & Co. gave the shares a neutral rating and a price target of $31 last week.
--With assistance from Gaurav Panchal.
To contact the reporter on this story: Joe Easton in London at jeaston7@bloomberg.net
To contact the editors responsible for this story: Beth Mellor at bmellor@bloomberg.net, Paul Jarvis
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