Morgan Stanley analyst Meta Marshall upgraded the stock to overweight from equal-weight with a price target of $400 a share.
Roadblocks to wider margins are easing, creating a positive setup for the company, the analyst said. And while revenue expectations "are not low, we believe they are doable," Marshall said.
The firm sees a revenue beat of 5% or greater as likely to boost the stock.
Zoom Video shares at last check jumped 2.8% to $347.11. The stock has traded on Thursday up as much as 6% near $358.
"While we think that Zoom is certainly building a durable platform for growth, our call is less on the multiyear durability of the platform or long-term competition threats and more about overdone concerns currently on [small and mid-size business] churn against a backdrop of investors who want to be more positive," Marshall said.
The firm notes that the bear argument against Zoom is that it grows organically under 20% next year and that the chance of employee churn has increased.
That narrative misses multiple drivers, according to Marshall, including, among others, the company's international business and mobile business.
While employee churn for small and medium-size businesses with fewer than 10 employees is a headwind, Morgan Stanley says, that group is not a part of the company's long-term value.
"The sooner ZM starts reducing the size of the business as an overall percentage of revenue, the better," Marshall said.