2020 has been a year like no other, with earth shattering events hogging the headlines. But the year has also provided many interesting sub-plots. One of which has been the rise of Zoom (ZM). The video conferencing platform has become a household name in the year of Covid-19, but for investors, ZM stock has also been the gift that keeps on giving. Shares are up by a whopping 594% year-to-date
After crushing the estimates in previous earnings reports, can the high-flying tech company repeat the feat once again? Ahead of next week’s earnings report, RBC analyst Alex Zukin expects Zoom to keep on outperforming.
“As we enter the fiscal 3Q report, we continue to see material upside to guidance/consensus expectations both in the quarter and for the year,” the 5-star analyst said. “With investor debate starting to center on the company’s ability to comp the tremendous growth achieved in FY21, our upside scenario still points to ~60% revenue growth in FY22.”
Zukin, who’s ranked at #5 out of over 7,100 analysts on TipRanks, rates ZM an Outperform (i.e. Buy) along with a $600 price target. The implication for investors? Upside of another ~27%. (To watch Zukin’s track record, click here)
Zukin remains confident despite data showing a slowdown in app downloads since April’s peak. However, download levels still remain “significantly above pre-COVID levels.” Bolstering the bullish case, MAU (monthly active users) trends are “much stronger and have actually eclipsed April highs.” Zukin puts the uptick down to back to school activity. In each successive month of the quarter, MAUs have increased; up from 145 million in August to 210 million in September and peaking at 222 million in October.
“We note that if trends similar to F2Q—where ZM generated incremental revenue of $1.62 per download—hold, the company would post total revenue of $909M (+446% Y/Y) in F3Q,” Zukin said.
That figure is actually higher than Zukin’s projection. The analyst expects Zoom to post revenue between $813–900 million. Still, this forecast is 17–30% ahead of the Street’s estimate of $693 million.
While Zukin’s assessment is conclusively positive, the rest of the Street’s take is a mixed bag; Based on 11 Buys, 12 Holds, and 1 Sell, Zoom has a Moderate Buy consensus rating. Overall, analysts expect the stock to stay range-bound for the foreseeable future, as the $477.67 average price target indicates. (See Zoom stock analysis on TipRanks)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.