Seth Gilbert CFA, an analyst from UBS, maintained the Hold rating on Zoom Video Communications. The associated price target remains the same with $85.00.
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Seth Gilbert CFA has given his Hold rating due to a combination of factors that reflect both potential and uncertainty in Zoom Video Communications’ future performance. While there is optimism regarding future growth, particularly with the positive reception of AI Companion wins with major clients like Salesforce and Oracle, there remains uncertainty about the timing of a significant revenue increase. The company is focusing on enhancing its product-led discovery and optimizing the purchase flow to capitalize on its substantial free user base.
Moreover, Zoom’s indirect AI monetization strategies, such as attracting new customers and reducing churn, are promising, but the direct monetization efforts are still developing. The company’s operating margins are strong at over 40%, but they are not expected to align with long-term targets until revenue growth accelerates. Additionally, while the company is actively engaging in share buybacks, the impact of recent acquisitions is minimal, and future acquisitions are expected to be small to medium-sized. These factors contribute to a cautious outlook, justifying the Hold rating.
In another report released on November 25, Bernstein also maintained a Hold rating on the stock with a $90.00 price target.