The video conferencing company Zoom Video Communications (ZM) is set to announce its fiscal Q4 FY25 results on February 24. ZM stock has surged more than 38% over the past year, driven by AI advancements and solid financial results. Wall Street analysts predict the company’s earnings will drop 8.5% year-over-year to $1.30 per share, while revenue is expected to rise 2.6% to $1.18 billion.
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It is worth noting that Zoom has a strong track record of beating market expectations and has surpassed earnings estimates in each of the last nine quarters.
Analysts’ Views on ZM Ahead of Q4 Results
Ahead of Zoom’s Q4 FY25 results, Morgan Stanley analyst Meta Marshall gave a Hold rating on the stock along with a $96 price target. The analyst highlighted that though the company’s Enterprise segment is expected to drive a modest revenue increase, it may not be enough to trigger a stock re-rating. Further, the analyst remains cautiously optimistic about Zoom’s long-term potential due to the current valuation and market conditions.
Similarly, Citi analyst Tyler Radke cut Zoom’s price target to $85 from $86 while keeping a Neutral rating. The firm is less optimistic heading into the Q4 report, citing weak partner feedback and slowing web traffic. Moreover, Radke sees no clear catalyst for Zoom’s reacceleration in the near future.
Here’s What Zoom’s Q4 Website Traffic Data Reveals
Being a cloud-based video conferencing company, tracking user visits to its website is crucial for determining the ongoing popularity of its solutions. As Zoom makes the majority of its money through subscriptions to its communications platform, more visits might lead to more subscriptions, resulting in more revenues for the firm, and vice versa.
Therefore, we investigated Zoom’s monthly user data using TipRanks’ website to get a clearer view of the company’s current status ahead of the Q4 print.
When taking a look at Zoom’s website traffic, the traffic screener shows a decrease in visits both on a sequential as well as on a year-over-year basis in Q4. Specifically, visits to zoom.us fell by 46.97% compared to Q4 last year and 5.76% on a sequential basis.
What Do Options Traders Anticipate?
Using TipRanks’ Options tool, we can see what options traders are expecting from the stock immediately after its earnings report. The expected earnings move is determined by calculating the at-the-money straddle of the options closest to expiration after the earnings announcement. If this sounds complicated, don’t worry, the Options tool does this for you.
Indeed, it currently says that options traders are expecting a 9.51% move in either direction.
Is Zoom a Buy or Hold?
Turning to Wall Street, analysts have a Hold consensus rating on Zoom stock based on five Buys, 15 Holds, and one Sell assigned in the past three months, as indicated by the graphic below. The analysts’ average price target on ZM stock of $92.45 implies an upside potential of 8.55%.
