The coronavirus pandemic presents "significant upside potential" for Zoom Video Communications (ZM) - Get Report, according to a Cantor Fitzgerald analyst who initiated coverage of the teleconferencing company with an overweight rating and a price target of $150 a share.
Shares of the San Jose-based company were climbing 4.9% to $142.61.
"We believe the current Covid-19 environment presents significant upside potential not currently assumed in the stock," analyst Drew Kootman said in a note to clients. "Zoom provides a superior communication platform in a time where video and connectivity is becoming more important for all industries and business sizes."
The coronavirus outbreak has sparked a virtual shutdown of the world's economy with many companies using Zoom to conduct online meetings to stay in operation while observing social distancing requirements.
Kootman said he expected "the virus to provide upside to estimates and for the platform and its products to drive increased market penetration and future cross-selling opportunities."
The analyst said he estimated the impact from Covid-19 may increase revenue for the company by about $80 million on top of original guidance for fiscal year 2021 and about $250 million for fiscal year 2022 from the current consensus.
Kootman said he also expects Zoom to continue to gain market share, doubling to 3% in fiscal year 2023, up from about 1.5% currently. "
"We expect paid customers to continue to increase due to new customer acquisition and converted free users," Kootman said. "Zoom’s expanding product set allows for plenty of cross-sell opportunities, leading to additional revenue per customer."
The analyst said that Zoom Phone and Zoom Rooms are among the "key new products with significant market penetration opportunity."
Zoom has sparked concerns about privacy and so-called Zoombombing, a form of trolling where a participant uses Zoom's screensharing feature to interrupt and disrupt meetings or classes.
Last week, U.S. senators were advised not to use the platform. Alphabet parent Google (GOOGL) - Get Report which has a competing service, also banned the use of Zoom on its corporate computers, though employees can still use it on their personal devices.
Zoom was also banned by the New York City Department of Education over privacy concerns.
Zoom Founder and CEO Eric Yuan recently laid out a 90-day plan to address the company's security challenges.