Zoom Video Communications (ticker: ZM) reported an earnings beat after the bell on Monday, resulting in a 0.2% increase to $66.16 in premarket trading on Tuesday. The company has made progress in improving profitability and reducing customer churn.
During the Covid-19 pandemic, the shift to remote work significantly benefited Zoom as it capitalized on the sudden surge in demand for its services. However, since then, the company’s prospects have diminished, leading to a fall of 14% in its shares from a year ago and a collapse from a peak price above $500 in late 2020. On FactSet, the stock has received 18 Hold ratings compared to only 9 Buy ratings.
Mizuho analysts, led by Siti Panigrahi, believe that Zoom has several “longer-term growth levers,” such as its artificial intelligence companion and virtual agent products. They find Zoom to be attractively valued and recommend it as a Buy with a $100 price target.
Likewise, RBC Capital Markets rates the shares as Outperform. Rishi Jaluria, a leading analyst, acknowledges Zoom’s strong quarter but expresses uncertainty about the visibility of reacceleration.
On the other hand, KeyBanc analysts, led by Thomas Blakey, are more skeptical about Zoom’s prospects. They attribute this skepticism to macroeconomic forces working against the company and the lack of guidance on future growth. Consequently, they rate the shares as Sector Weight, which is equivalent to Hold.
In conclusion, there are differing opinions among analysts regarding the likelihood of Zoom Video Communications achieving new growth. While some view it as an attractive investment opportunity, others remain cautious given the prevailing economic conditions.