Bank of America Securities analyst Michael Funk reiterated a Hold rating on Zoom Video Communications yesterday and set a price target of $84.00.
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Michael Funk has given his Hold rating due to a combination of factors impacting Zoom Video Communications. While the company has shown progress in revenue growth and margin improvement, driven by strong demand in areas like phone, contact center, and AI, there are uncertainties that temper the outlook. The revenue beat was partly influenced by professional services, which management did not quantify, and a one-time margin benefit from delayed hiring.
Additionally, recent tax law changes have significantly affected the free cash flow guidance revision. Despite better-than-expected results for FY2Q26 and increased guidance for 2026, Zoom’s future growth visibility remains weaker compared to its peers. This uncertainty justifies the discounted valuation multiple of 9.7x EV/FCF, which is lower than the software peer group average of 17x. Consequently, the Hold rating reflects a cautious stance given these mixed signals.
Funk covers the Technology sector, focusing on stocks such as AST SpaceMobile, Guidewire, and Zoom Video Communications. According to TipRanks, Funk has an average return of -8.0% and a 37.42% success rate on recommended stocks.