Zoom Q1 Earnings to Climb Nearly Fourfold; Target Price $415

The San Jose, California-based communications technology company Zoom is expected to report its first-quarter earnings of $0.99 per share, which represents year-over-year growth of about 395% from $0.20 per share seen in the same period a year ago.

The company, which provides videotelephony and online chat services through a cloud-based peer-to-peer software platform, would post revenue growth of 175.8% to $905.24 million.

The earnings report is expected to be released on June 1, 2021. For first-quarter fiscal 2022, Zoom forecasts revenues in the range of $900 million and $905 million. Non-GAAP income from operations is expected in the range of $295 million and $300 million. Moreover, non-GAAP earnings are expected in the 95-97 cents-per-share range.

The cloud video communications provider forecasts revenues in the range of $3.760 billion and $3.780 billion for the full fiscal year. Zoom stock fell about 4% so far this year.

“Zoom Video is benefiting coronavirus-induced remote working trend. Its efforts to eradicate security and privacy flaws are expected to aid it to expand its user base,” noted analysts at ZACKS Research.

Analyst Comments

“Sentiment improving, but still leans negative heading into FQ1. Commentary around 2H churn / Phone still likely more incremental to move vs. 1Q print / 2Q guide. Profitability potential meaningful LT, but balanced in NT by churn concerns, keeping us EW into print,” noted Meta A Marshall, an equity analyst at Morgan Stanley.

“Zoom has established its position as the newly emerged leader in video conferencing, now a growth market, largely credible to the company itself given introduction of a solution that employees actually use. The company has a meaningful competitive moat built on more than just architecture, but a rapid uptick in video usage has attracted significant investment efforts from competitors. Position within customers makes an attractive opportunity to expand into the broader UC market. Early wins encouraging. Environment post-COVID and large-scale WFH, and timing to reach, less certain.”

Zoom Stock Price Forecast

Nineteen analysts who offered stock ratings for Zoom Video Communications in the last three months forecast the average price in 12 months of $415.06 with a high forecast of $550.00 and a low forecast of $250.00.

The average price target represents a 27.33% increase from the last price of $325.97. Of those 19 analysts, six rated “Buy”, 11 rated “Hold” while two rated “Sell”, according to Tipranks.

Morgan Stanley gave the stock price forecast of $360 with a high of $480 under a bull scenario and $240 under the worst-case scenario. The firm gave an “Equal-weight” rating on the communications software company’s stock.

Several other analysts have also updated their stock outlook. UBS initiated with neutral rating; price target $325. Citigroup lowered the target price to $362 from $501. Baird slashed the target price to $400 from $550. Mizuho cut the target price to $400 from $550.

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