Zoom Video Analyst Says Growth Is More Than A Coronavirus Bump: 'Lasting Paradigm Change'

While Zoom Video Communications Inc ZM is benefiting from increased video calls in the COVID-19 environment, and video adoption is unlikely to decelerate anytime soon, according to Morgan Stanley.

The Zoom Analyst: Meta Marshall maintained an Equal-Weight rating on Zoom Video Communications with a $190 price target. 

The Zoom Thesis: Zoom continues to be in an advantageous position to monetize its vast user base with paid video and other services, Marshall said in a Tuesday note. (See her track record here.) 

Although Zoom is still in early stages, with only 15%-20% of its customer base comprising paid users, the company has “meaningful opportunity for growth” with both video and additional platform services, the analyst said. 

Speaking at Morgan Stanley’s Future of Work conference Monday, Zoom’s management noted ways of monetizing the installed base, Marshall said.

Achieving such monetization would lend significant and permanent upside to the stock, she said. 

Marshall expressed caution  around the possibility of a slowdown in net adds in the back half of 2020 and additional customer churn in the near-term.

At the same time, video usage seems to be more than just a passing COVID-19 tailwind, the analyst said. 

It could be “a lasting paradigm change,” she said. 

ZM Price Action: Shares of Zoom Video Communications were up 0.82% at $253.32 at the time of publication. 

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Photo courtesy of Zoom Communications.