Seth Gilbert CFA, an analyst from UBS, has initiated a new Hold rating on Zoom Video Communications (ZM).
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Seth Gilbert CFA has given his Hold rating due to a combination of factors that reflect a balanced risk/reward scenario for Zoom Video Communications. The analysis indicates that while the core Meetings product has reached saturation, the Phone and Contact Center segments are expected to drive future growth. However, the anticipated revenue growth of 3-4% aligns with market expectations, suggesting limited upside potential.
Additionally, the monetization of Zoom’s Custom AI Companion appears to be in its early stages, with mixed feedback on its conversion rate. Despite the integration of AI across Zoom’s offerings, its impact on closing deals remains modest. The stock’s valuation, trading at 9 times the estimated free cash flow for FY27, is considered fair given the company’s growth prospects and stock-based compensation levels. As such, the Hold rating reflects a cautious stance, awaiting clearer signs of growth acceleration.
In another report released on October 15, J.P. Morgan also maintained a Hold rating on the stock with a $85.00 price target.