Oppenheimer analyst Timothy Horan initiated coverage on shares of  Vonage Holdings Corp. (NYSE:VG) with an Outperform rating and a price target of $6.00, which represents a potential upside of 25% from where the stock is currently trading.

Horan noted, “Vonage provides telecommunications and unified communications as a service (UCaaS) solutions using voice over Internet Protocol (VoIP) services to consumers historically, and in the last two years for businesses. Since its 4Q13 acquisition of Vocalocity, Vonage has shifted focus toward the small- and medium-sized business space (SMB), which now comprises nearly 25% of total revenue, but is growing at 40% organically. We see this SMB market as attractive as shown by RNG’s 4x revenue multiple valuation. VG is acquiring Broadsoft resellers in the 2x multiple range, and we believe there are a dozen more it can acquire in the 1.5x multiple range.”

Bottom line, “We expect the consumer business to continue its secular decline (~5% YoY on the top line) but business revenue growth in the 30% range, with M&A materially adding to this. Margins should bottom in the next few quarters.”

According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Timothy Horan has a total average return of 2.4% and a 71.8% success rate. Horan is ranked #1148 out of 3635 analysts.

The two analysts polled by Tipranks rate Vonage Holdings a Buy. With a return potential of 26.8%, the stock’s consensus target price stands at $6.10.