Zoom Video Lifts To All-Time High Despite Mixed Commentary

Alan Farley
Updated: Jun 17, 2020, 15:28 UTC

Zoom Video is trading at an all-time high after an outstanding first quarter, even though shutdowns have ended in most parts of the world.


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Zoom Video Communications went ballistic in February when the pandemic triggered huge interest in their video conferencing software.  The easy-to-use interface fit perfectly with the need to conduct business and connect with family and friends during a tough period. In turn, this generated major Wall Street attention, triggering a flood of upgrades. A sense of normalcy returned in the second quarter but that didn’t stop the stock from breaking out after blowing away first quarter estimates on June 2.

Zoom Security Issues

Still, Zoom security holes have been well-documented, forcing many American and European businesses to switch to competitive offerings. The company has pledged to fix these flaws and recently opened discussions with Google to use their cybersecurity service. Public and government sales are also increasing, underpinned by Zoom for Government, which received Federal clearance in April 2109.

Analysts Divided On Prospects

Analyst rating consensus has grown more divided in the second quarter. This isn’t surprising, given the end of shutdowns in most parts of the world. The consensus currently features 11 ‘Buy’ recommendations and 10 ‘Hold” recommendations.  No analyst recommends selling the stock at this time.  Price targets range from $105.00 to $261.00, with a median $214 target. The stock is now trading less than 25 points under the high estimate, raising odds for downgrades.

Needham’s Richard Valera raised their target from $230 to $240 earlier this month, stating Zoom has “smashed its Q1 2021 print and guide – a performance unlike we’ve seen in 20+ years of tech coverage”. He tempered his enthusiasm, agreeing the company faces roadblocks that include “sharply increased churn relative to historic levels”. However, he expects headwinds to ease in 2022 and beyond, allowing a re-acceleration of net paid user growth.

Zoom Technical Outlook

The stock topped out just above 100 in June 2019 and sold off into the lower 60s in October. It resumed its uptrend in February 200, reaching the prior high a few weeks later. The subsequent breakout has added near 140 points in less than 4 months, highlighting intense momentum buying interest. Accumulation readings match bullish price action, making it easy for Zoom to gain additional points into the third quarter.

About the Author

Alan Farley is the best-selling author of ‘The Master Swing Trader’ and market professional since the 1990s, with expertise in balance sheets, technical analysis, price action (tape reading), and broker performance.

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