Analysts on 85% of Zoom’s shelves have called for a rally

(Bloomberg) – Zoom Video Communications Inc.’s stock sales volume may be much higher.

This is the message from Benchmark Co.’s Matthew Harrigan and other analysts, who say the video-conferencing company is well-positioned as a hybrid work service provider after running a stay-at-home boom. And with the stock hollowing out about 85% from its 2020 pandemic peak, erasing a market value of about 5 135 billion, they see a rally opportunity.

“The stabilization on Zoom has been exaggerated as the Covid epidemic lockdown catastrophe because global technology and financial institutions recognize the sustainability of hybrid work,” Harigan said in a note previewing first-quarter results for clients, which is due to be released Monday after the U.S. market closes. .

Most large companies now offer employees the flexibility to work both from the office and from home, although this has been challenged in many countries due to the growing covid case. Apple Inc. This month has delayed a plan for employees to return to the office three days a week. Thomas Gottstein, CEO of Credit Suisse Group AG, said he did not think banks would return to full-time office.

All of this points well to the zoom, which, unlike some epidemic loved ones, is still showing an increase in its core metrics. After sales more than 12-fold in the last three fiscal years, analysts expect a 12% increase in the first quarter.

Netflix Inc. Compare that, which failed to hold a huge pull of new customers during the epidemic, and last month shocked Wall Street with the first drop in customers in more than a decade.

Analysts like Harigan think Zoom’s product offerings could make it a post-coward winner because more employees want flexible work arrangements.

“I don’t think Zoom is filtering the road through all the tea leaves,” said Daniel Morgan, senior portfolio manager at Synovas Trust. “They’re stamping it with stay-at-home covid trades like Amazon or Netflix and not really looking at the big basics.”

Morgan Stanley analyst Meta Marshall says the quarterly report should act as a catalyst to dispel excessive bearish sentiment about the rise in zoom.

Marshall wrote in a note that “the renewal of the contract signed at the initial stage of Covid will pass for one more year between the March / April period, which will provide a better perspective on the enterprise customer retention.” Zuma has a recommendation for his weight.

The forecast is reversed

According to data compiled by Bloomberg, widely supported by bullish sentiment, analysts predict that the stock will rise 65% to $ 143.30 in the next 12 months. While this is far from its 2020 high of 8 568.34, it represents a huge potential return for stock buyers at the current depressing level. Zoom closed at $ 89.74 on Friday.

Besides, stock valuations are nowhere near as foamy as before. The San Jose, California-based company traded about 25 times the forward income, down 225 times in September 2020.

To be sure, zoom growth has slowed as schools have reopened privately, offices have reopened, and competition from Microsoft Corporation’s Team Software, Salesforce Inc.’s Slack Platform, and Cisco Systems Inc.’s Webex has increased.

Instability expected

According to data compiled by Bloomberg, traders are worried about some volatility in the aftermath of the results, with the stock expected to move more than 21% on both sides – a move larger than seen in the last six quarterly reports.

Yet overall, there is a sense of optimism that the Zoom epidemic is set to improve in the next world.

“Even as we move into a more hybrid work environment, we will need a reliable platform for virtual communication to complement personal meetings, and from a user perspective there is already a strong sense of zoom,” said Pedro Palandrani, director of research at Global XA.

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(Update gives possible returns in paragraph 11.)

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