Zoom Zooms on Analysts' Upgrades Following Blowout Earnings

Zoom Video surges after the company posts earnings and sales that blow past Wall Street estimates, sparking a flurry of analyst upgrades.
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Shares of online meeting and collaboration platform provider Zoom Video Communications  (ZM) - Get Report surged uesday after the company posted fiscal quarterly earnings and sales that blew past Wall Street estimates, in turn sparking a flurry of analyst upgrades.

Shares of Zoom were up more than 36% in early trading on Tuesday after the San Jose-based company not only topped estimates for its fiscal second quarter but also raised its sales outlook as businesses and individuals alike continue to make Zoom a verb amid work-from-home edicts throughout the world, thanks to the coronavirus pandemic.

Goldman Sachs analyst Heather Bellini led the pack, raising her recommendation on Zoom to neutral from sell and lifting her one-year price target to $402. BTIG analyst Matt VanVliet followed suit, upgrading Zoom to buy from neutral with a $500 price target, noting the company "reported another quarter from a different planet."

Citi analyst Walter Pritchard took a more modest tack, raising his price target on Zoom to $377 from $217 and keeping his neutral rating on the shares.

Shares of Zoom were up almost 40% at $453.70 in afternoon trading on Tuesday.

Zoom suffered growing pains at the start of the pandemic as a surge in users to its platform exposed significant security flaws - not only in how people were virtually able to step into others’ online meetings, a phenomenon that earned the moniker “Zoombombing,” but also gain access to recordings of meetings and even individual computer and network systems.

For its part, Zoom has sought to address the concerns, bringing on a slate of technology experts who have beefed up encryption and also changed around the platform's interface to allow users to add on more features that can screen, mute and kick off participants, and also allow users to report bad activity and security breaches.

Despite significant competition from the likes of Microsoft (MSFT) - Get Report, Google (GOOGL) - Get Report, Facebook's (FB) - Get Report WhatsApp and Ring Central (RNG) - Get Report, Zoom has continued to be the communication platform of choice, leading to record sales and earnings, and in turn analyst upgrades.

Even though the company is pulling sales forward from future quarters in terms of its own future earnings expectations, its long-term prospects remain solid, particularly when looking at its raised per-share guidance, said TheStreet's Ed Ponsi

"Long story short, Zoom's prospects look good going forward," he said.