Takeaways From 6 Zoom Video Analysts On Work-From-Home Stock's Big Q2 Beat

Zoom Video Communications ZM reported a blowout second quarter Monday that saw revenue up 355%. The company’s customer base grew by 458% to 370,200.

Here's what the Street has to say. 

The Zoom Analysts: BTIG analyst Matt VanVliet upgraded Zoom from Neutral to Buy and added a $500 price target. 

Rosenblatt analyst Ryan Koontz maintained a Neutral rating on Zoom and increased the price target from $260 to $350.

Needham analyst Richard Valera maintained a Buy rating and raised the price target from $230 to $440.

Morgan Stanley analyst Meta Marshall maintained an Equal-Weight rating and lifted the price target from $240 to $350. 

KeyBanc Capital Markets analyst Alex Kurtz maintained a Sector-Weight rating. 

BofA Securities analyst Nikolay Beliov reiterated a Buy rating and upped the price target from $260 to $475.  

The Zoom Bull Case: “We believe ZM has a multiyear runway of growth off its much larger base and an opportunity to double revenue again in the next 3-4 years,” Needham's Valera said in a note.

The sell-side firm's price target of $440 is based on 27x fiscal year 2025 revenue.

BTIG's VanVliet has a $500 price target on Zoom shares.

“So we’re jumping into the deep end after its back-to-back monstrous quarters, as we believe that global widespread adoption is still in the early stages,” the analyst said. 

BofA also raised its price target after the quarterly print.

“The results confirm our view that ZM is both a vaccine and vitamin as COVID-19 has permanently shifted the world to a hybrid-work environment,” Beliov said.

The Cautious Zoom Analysts: Rosenblatt's Koontz remains Neutral on Zoom.

“ZM has delivered on one of the most impressive string of quarters in enterprise software in recent memory,” the analyst said.

Rosenblatt's price target is based on 35x the firm's FY22 revenue estimate of $3 billion.

Morgan Stanley's Marshall has an Equal-Weight rating on Zoom. 

“Given it is trading at around 40x fiscal 2021 estimated revenue after market, we think that is more than embedded in a price that is more reflective of bull case assumptions,” the analyst said. 

KeyBanc's Kurtz said the investor focus is now on "what's needed to support the valuation at 42x fiscal year 2022 estimates." 

Zoom Phone: Several of the analysts named Zoom Phone as a future catalyst.

“We foresee an inflection in ZM’s Phone business in fiscal year 2021, as ZM embraces the channel and standalone sales of Phone,” said Needham's Valera.  

BTIG's VanVliet said Zoom Phone is reaching existing customers on a global basis, with the two largest deals signed by the company this quarter being outside the Americas. 

KeyBanc's Kurtz said no major metrics were provided for Zoom Phone, but it was cited as a key to the company's long-term expansion. 

Zoomtopia A Catalyst? Morgan Stanley's Marshall said Zoom’s Oct. 14 analyst day is the next potential catalyst and risk for the stock. This annual event occurs before the company reports third-quarter earnings.

BTIG's VanVliet also highlighted Zoomtopia as a catalyst.

“Zoom will provide an update on their product roadmap as well as longer-term financial targets,” the analyst said. 

ZM Price Action: Zoom shares were rocketing 36.3% higher to $443.10 at the time of publication Tuesday. 

Photo courtesy of Zoom.