Bandwidth (BAND) has solid advantages as a provider of communications platforms for calls, text and AI voice, BofA Securities said in a note Wednesday.
The investment firm noted that Bandwidth "owns and operates its network and has a 99% customer retention rate."
However, the company's services, like AI voice and Maestro, are "two big growth debates" that "are far from becoming material growth drivers," the note said.
BofA said that the company's shares have surged 225% year to date, mainly due to the "voice AI opportunity" but further upside may now be limited.
Revenue growth from the company's Voice Solutions segment decreased to 9% year on year in Q2 from 12% in Q1, and Maestro's $25 million annual recurring revenue is a "limited growth driver" compared with the $607 million Q2 annualized Cloud Communications revenue, BofA said.
AI voice growth "needs to accelerate and remain above 15% annually" for investors to view it as "more than just a product with promise," the note said.
BofA started coverage of Bandwidth with a neutral rating and $60 price target.
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