It’s impossible to discuss early pandemic market winners without mentioning Zoom (NASDAQ:ZM). The video conference platform has become so well-known that its name is now also a verb for video-calls. However, although ZM stock rose by more than 600% in 2020 before hitting its October peak, the company has failed to adapt to the shifting economic landscape.
Zoom’s prices have been firmly in the red for a while; they have fallen 57% over the last six months. InvestorPlace contributor Tezcan Gecgil recently named the stock an undervalued buy after the market selloff. ZM stock’s recent performance, however, does little to inspire investor confidence.
ZM Stock: A Disappointing Earnings Report
Yesterday, Zoom reported earnings for the final quarter of 2021. To make a long story short, the results were disappointing. The company issued a weaker-than-expected revenue forecast not just for the first quarter but for the entire fiscal year. For fiscal 2023, management forecast earnings of $3.48 per share at the midpoint on $4.54 billion revenue. This comes up short against the analyst prediction of $4.36 on $4.71 billion in revenue. It was also reported that Zoom had seen its customer base decrease from 512,000 to 509,800 in Q4.
None of this is surprising, of course. It was predicted that Zoom’s revenue growth would slow down in the final quarter of 2021 as the world shifted away from pandemic measures. Workers are returning to their offices (at least in part) and companies are scaling back their investments in software packages like Zoom. As InvestorPlace contributor Faizan Farooque notes, there is also increasing competition from companies like Microsoft (NASDAQ:MSFT), whose Team Essentials package poses a new threat.
The common sentiment among analysts on Tipranks is that ZM stock is a hold or moderate buy. Since yesterday’s earnings report, shares have fallen more than 6% and are currently below the platform’s lowest price target of $130. Let’s take a closer look at some more ZM stock price predictions.
Analysts Weigh In on Zoom Price Predictions
- Matthew Niknam of Deutsche Bank recently reiterated a price target of $155 and a “hold” rating for Zoom. His previous ZM stock price target was $280, representing a significant drop off. In a report, Ninam stated that “Guidance for ‘just’ 11% growth next fiscal year vs. consensus at 16% is unlikely to trigger a meaningfully negative stock reaction like we’ve seen in recent periods.”
- Citi analyst Tyler Radke also reiterated a “hold” on ZM but issued a lower price target of $139. In a note, Radke stated he saw increasing competition as a reason to regard ZM stock with caution. Discussing the customers leaving Zoom for Microsoft Teams, Radke noted that “This trend has been accelerating with return to office and comfort level by IT departments, which is rationalizing collaboration systems and showing preference for Microsoft’s security features.”
- Finally, in keeping with the bearish sentiment, Goldman Sachs analyst Kash Rangan maintained a neutral rating on ZM stock. Rangan continues to regard Zoom as a position to hold and has lowered his price target from $200 t0 $171.
On the date of publication, Samuel O’Brient did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
