Video conferencing provider and pandemic darling Zoom Video Communications (NASDAQ:ZM) turned in its earnings report late yesterday, and the company's share price raced forward 3% in after-hours trading at one point. While the company gave back most of those gains in this morning's session, the company still produced wins throughout its report, though it gave investors some cautions about going forward. These cautions are mirrored in financial analysts' commentary on the company, which has held a fairly constant track for the last two years.
Massive Gains in the Zoom Earnings Report
Zoom's earnings report came fairly packed with wins, particularly the revelation that the company brought in an adjusted figure of $1.33 per share in earnings. That readily beat the consensus estimate that called for an even $1 per share, but also destroyed figures from the same time last year, when the company posted just $0.20 per share in adjusted earnings.
Revenue turned out to be an even bigger winner, as the company posted $956.2 million. This beat analysts' expectations, which, according to Bloomberg, looked for a consensus $910.2 million figure. The real win emerged with year-ago figures. Zoom's revenue was up fully 191% from the same period a year prior, when the company posted just $328.2 million.
CEO Eric Yuan pointed to the ongoing need for “frictionless video communications” in the current work environment for much of the company's success. Meanwhile, the company's CFO, Kelly Steckelberg, pointed to “strong sales and marketing execution” along with “lower-than-expected churn” for producing results that beat even Zoom's own best-case projections.
With the pandemic waning and vaccination rates on the rise, however, many are moving to point out that Zoom's future is inherently limited. Zoom is projecting second-quarter revenue to come in somewhere between $985 million and $990 million, which is still well above analysts' current consensus projections of $941 million.
What are Financial Analysts Saying About ZM Stock?
The Zoom app has produced quite a bit of benefit for users over the last year, and so has Zoom stock. Financial analysts, as based on our latest research, are proving somewhat cautious in terms of getting onboard with Zoom stock. There's a substantially bullish component of analysis here, but there's a nearly-equivalent bearish component as well. Thus, the company carries a consensus rating of “hold”, and has held that rating for over two years now.
A year ago, Zoom had 11 “buy” ratings, 11 “hold” ratings and one “sell” rating to its credit. Six months ago, the ratings shifted to 15 “buy” ratings, 11 “hold” and two “sell”. Today it stands at 15 “buy”, 12 “hold” and three “sell.” The bullish side is as substantial as ever, but the less bullish elements have been gaining in intensity over the last few months.
The Zoom share price target, meanwhile, is in a very broad range. The current average is $419.23 per share, with a high of $611 and a low of $215. With shares currently trading at $323.54 as of this writing, there seems to be upside potential involved here. However, stale listings are complicating matters; that high of $611 goes back to October 2020, when Sanford C. Bernstein upgraded its price target from $228 at the time to $611 and doesn't seem to have changed it yet.
Recent action has been generally positive for the company. Earlier today, six analysts shifted their price targets on the company. Two lowered their targets; Piper Sandler dropped back from $541 to $464, and BTIG Research cut back from $550 to $495. However, four raised their targets. Citigroup went up from $362 to $380, and JPMorgan Chase & Co. upgraded from $385 to $456. Deutsche Bank Aktiengesellschaft upgraded from $360 to $375, and UBS Group upgraded from $325 to $345.
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