Despite reporting upbeat revenues and earnings for Q1, shares of Zoom Video Communications Inc (ZM) tanked significantly in early trading last Tuesday.
Analysts have mixed views on Zoom’s future growth prospects as the report came amid an exciting earnings season. Here are the key takeaways from the earnings release of Zoom Video Communications:
Morgan Stanley On Zoom Video Communications
Meta Marshall, an analyst at Morgan Stanley, maintained an Equal-Weight rating and price target of $78. The analyst stated that Zoom is among the most profitable companies within software, but its growth prospects and SBC expense have been ongoing overhangs for investors.
Oppenheimer On Zoom Video Communications
George Iwanyc, an analyst at Oppenheimer, reiterated a Perform rating on the stock. Iwanyc acknowledged Zoom’s Online business “started to show signs of stabilization faster than expected” but expressed his concerns over the recent layoffs and sales force realignment that would “compound the macro pressure on Enterprise revenue growth” and may affect its growth prospects in the coming years.
RBC Capital Markets On Zoom Video Communications
Rishi Jaluria, an analyst at RBC Capital Markets, reaffirmed an Outperform rating and price target of $95. Jaluria stated that Zoom’s quarterly results were solid, and its growth in the Online business offset the Enterprise weaknesses.
William Blair On Zoom Video Communications
Matt Stotler, an analyst at William Blair, maintained an Outperform rating on the stock. Stotler believed that Zoom’s strategic shift towards a platform focus and emphasis on optimizing go-to-market functions and maintaining a strong balance sheet should help the company outlast any near-term uncertainty while providing capacity to ramp investments when the macro environment turns more favorable.
Bernstein On Zoom Video Communications
Peter Weed, an analyst at Bernstein, reiterated a Market Perform rating and price target of $92. Weed noted that the enterprise business is expected to contract over 3% QoQ in Q2, given the company’s restructuring in the first quarter.
Zoom Video Communications was down 7.74% to $65.89 at the time of publishing on Tuesday.
