ZoomInfo Faces Near-Term Headwinds But Analysts Bet On Its Long-Term Prospects As SaaS Player

Mizuho analyst Siti Panigrahi maintained ZoomInfo Technologies ZI with a Buy and cut the price target from $65 to $50. ZoomInfo reported a mixed set of Q3 results. 

While the company delivered revenue ahead of consensus, the miss on billings and management's commentary about the worsening macro backdrop with weak Q4 guidance sent shares down 21% after hours. 

ZoomInfo is not immune to the macro, and Panigrahi expects revenue growth to decelerate to 29% in 2023 (from 47% in 2022). 

The analyst believes ZoomInfo continues to offer a best-in-class SaaS financial profile with solid cash flow generation and expects management to prioritize margin improvement in the current market conditions. 

Morgan Stanley analyst Elizabeth Porter maintained ZI with an Overweight and lowered the price target from $66 to $60. Porter views the slowdown as a sales capacity issue tied to macro headwinds and sees the long-term tailwinds in the secular shift to B2B sales and ZoomInfo's leadership position intact. 

The analyst remains positive on the LT thesis and believes this represents an opportunity to accumulate shares of one of the most efficient unit economics stories in SaaS.

Credit Suisse analyst Phil Winslow maintained ZI with an Outperform and reduced the price target from $80 to $65. Although macro headwinds affected ZoomInfo's near-term momentum, he believes in modernizing the B2B go-to-market stack, driving long-term growth for the CRM market and ZoomInfo specifically. 

Raymond James analyst Brian Peterson maintained ZI with an Outperform and cut the price target from $65 to $41. The re-rating followed the following 3Q results that showed slowing growth trends, including double-digit deceleration in both billings and cRPO. 

While management's assessment of organic RPO at +30% still looks healthy in this environment, this quarter's trend line was much worse than feared. 

While shares will come under pressure, Peterson still thinks the long-term trajectory for shares is higher, particularly given the broadening product platform that addresses expanding use cases, a differentiated go-to-market motion, and delivering a best-in-class combination of growth/margins.

Price Action: ZI shares traded lower by 26.6% at $31.93 on the last check Wednesday.