Zoom Video Communications (ZM) shares zipped higher on Tuesday after better-than-expected fourth-quarter earnings and strong forward guidance spurred analysts to lift their one-year price targets, even as they expressed concern about the company's post-pandemic growth prospects.
The San Jose company on Monday reported fourth quarter adjusted earnings of $1.22 a share on revenue of $882.5 million, a 369% year-over-year increase. Analysts were expecting Zoom to report earnings of 79 cents a share on revenue of $811.7 million.
Keybanc’s Alex Kurtz noted Zoom had another “standout” quarter, though also cautioned that investor focus now will be on how the company can and will support its own market valuation. He raised his bull case to $610 from $603 and maintained his sector weight rating.
James Fish with Piper Sandler wrote in his own post-earnings research note to clients that the party “ is not over in comm software,” providing reason for additional upgrades going forward. He raised his one-year price target to $541 from $501 and maintained his overweight rating.
Morgan Stanley’s Meta Marshall noted that Zoom’s earnings beat was “meaningful” and its positive full-year 2022 outlook means it will raise estimates, though her team remains skeptical of what it calls “churn risk” in the second half of 2022. She raised her one-year price target to $420 from $390 and left her equal-weight rating on the shares.
Brad Zelnick with Credit Suisse called the results “impressive,” with the company doing well in pushing its addressable opportunity, though cautioned that the pace of new business deceleration limits the potential for meaningful upside to estimates. He raised his one-year price target to $375 from $340 and left his underperform rating in place.
At last check, Zoom Video shares were up 4.61% at $428.53, The stock jumped as much as 12% late Monday following the earnings numbers and future revenue forecast.
Those gains have translated into an approximate $2 billion wealth bump for Zoom Video founder Eric Yuan, who owns almost one-fifth of the video-conferencing company. Yuan is now worth about $22 billion, according to Bloomberg's Billionaires Index.