Zoom Video Communications, the online meeting software that experienced unprecedented growth during the Covid-19 pandemic, is now looking to achieve another burst of expansion. However, analysts hold divergent views on the likelihood of Zoom Video succeeding in this endeavor.
Earnings Beat and Positive Progress
Following an earnings beat after the bell on Monday, Zoom Video (ticker: ZM) saw a 0.2% increase in premarket trading on Tuesday, reaching $66.16. The company showcased advancements in improving profitability and mitigating customer churn, particularly among lower-paying clients.
From Boom to Slump
During the pandemic, the shift to remote work proved beneficial for Zoom as it capitalized on the sudden surge in demand for its services. Nevertheless, the firm’s outlook has since diminished. Since its peak price above $500 in late 2020, the stock has plummeted by 14% over the past year. Currently, FactSet reports 18 Hold ratings compared to only 9 Buy ratings.
Mixed Opinions on Long-Term Growth
Mizuho analysts, led by Siti Panigrahi, believe that Zoom has numerous “longer-term growth levers,” with a particular emphasis on its artificial intelligence companion and virtual agent products. They deem Zoom as attractively valued and recommend a Buy, setting a price target of $100.
RBC Capital Markets also rates the shares Outperform; however, analysts led by Rishi Jaluria mention that although Zoom had an impressive quarter, the visibility into future reacceleration remains uncertain.
KeyBanc analysts, led by Thomas Blakey, express a more skeptical stance on the company’s prospects. They attribute this skepticism to macroeconomic forces continuing to work against Zoom and the lack of guidance on future growth prospects. Consequently, they rate the shares as Sector Weight, which is equivalent to a Hold recommendation.
In summary, Zoom Video Communications is striving for renewed growth, with analysts offering differing perspectives on its potential. While some analysts highlight the company’s long-term growth opportunities and attractive valuation, others remain cautious due to external economic factors.