Analyst Michael Funk of Bank of America Securities reiterated a Hold rating on Zoom Video Communications (ZM – Research Report), with a price target of $90.00.
Michael Funk’s rating is based on a combination of factors, including Zoom Video Communications’ recent financial performance and future growth prospects. Although the company reported results that exceeded expectations in terms of revenue and operating income, the guidance for future revenue growth was slightly underwhelming. Adjustments for factors like foreign exchange rates and leap year effects suggest a modest growth outlook, which tempers expectations for significant stock price appreciation.
Additionally, while Zoom’s exposure to the public sector is limited, broader economic challenges may hinder its revenue acceleration in the near term. The company’s valuation, based on a free cash flow multiple, is discounted compared to its peers due to uncertainties in its growth trajectory and a competitive market environment. These considerations collectively support the Hold rating, as the stock’s potential for upside is balanced by these risks.
In another report released today, Bernstein also maintained a Hold rating on the stock with a $89.00 price target.
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