Zoom Video Gets Bullish Response From Analysts Following Earnings Beat

Analysts raise estimates on shares of Zoom Video following the company's earnings beat.
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Shares of Zoom Video  (ZM) - Get Report were rising sharply Thursday after numerous analysts took a bullish stance on the video conferencing company following its fourth-quarter earnings beat.

The stock was up 10.53% to $129.10 in trading Thursday.

Analysts at Piper Sandler raised their price target on the stock to $110 from $70 and  maintained their neutral rating.

“We raised our target multiple from 17x given the market dynamics around the coronavirus impact, likely higher growth than management’s initial guidance, and the anticipated success of Zoom Phone over the next year. We believe Zoom deserves a significant premium over peers (~14x) given its higher, sustainable growth and FCF generation,” analysts at the firm said.

Analysts at JMP also maintained their neutral equivalent rating as it sees the effects of the coronavirus actually helping the video conferencing company’s engagement. The firm said it expects a deceleration in usage “because much of the record usage Zoom is experiencing due to the Covid-19 epidemic is from free users and is not currently being monetized.”

J.P. Morgan analysts agreed with part of this assessment, saying that the company’s fourth- quarter results don't fully reflect the benefits to the company from the spread of the coronavirus. The firm raised its price target to $150 from $125.

“This is a $40B TAM that Zoom is penetrating at a rapid rate, as shown by one of the most attractive financial profiles seen in all of software at this stage of the company’s lifecycle," J.P. Morgan analysts said.

"The large market, combined with a technological competitive advantage and best-in-class growth profile, underscores our overweight rating,” analysts at the firm said.