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Tuesday, on the stock market, shares of Zoom Video Communications , Inc. (NASDAQ:ZM) continued to attract attention as Benchmark analyst Matthew Harrigan confirmed a Buy rating and a $97.00 price target for the company. According to InvestingPro data, 23 analysts have recently revised their earnings estimates upward for the upcoming period, supporting Harrigan’s optimistic stance. Currently trading at $75.15, Zoom’s stock appears undervalued based on InvestingPro’s Fair Value analysis. Harrigan acknowledged some challenges but remained optimistic about the stock’s potential, citing the significant growth in monthly active users (MAUs) for Zoom’s AI Companion.
In his analysis, Harrigan pointed out the "modest pace of continued innovation" as a point of frustration, particularly regarding the adoption of Zoom AI Companion and the impact of Workvivo on financial guidance for fiscal year 2026. The company maintains impressive financial health, with InvestingPro reporting a strong gross profit margin of 75.83% and more cash than debt on its balance sheet. Despite these concerns, he noted the impressive 68% acceleration in Zoom AI Companion’s quarterly MAU growth, a feature that currently comes at no additional cost to Online buyers.
Zoom’s AI Companion is set to become a monetized feature with a customized version expected to launch in April. With current revenue growth at 2.87% and a P/E ratio of 24.13, Harrigan believes that revenue acceleration is crucial for Zoom to justify an increase in its stock value. The valuation model used by Benchmark is based on a comparison with the Nasdaq 100’s normalized price-to-earnings ratio of 34x, factoring in a long-term growth rate for Zoom at approximately 6%. For deeper insights into Zoom’s valuation metrics and growth potential, investors can access the comprehensive Pro Research Report available on InvestingPro.
The analyst’s price target reflects a fair cost of equity in relation to the broader Nasdaq 100 index, which suggests that Zoom’s current stock performance and potential for growth are in line with market expectations. Harrigan’s stance indicates that, despite some hurdles, Zoom remains a solid investment with a clear path to revenue acceleration and stock upside.
Investors and market watchers will be looking forward to the upcoming introduction of the monetized AI Companion in April, which could provide further insight into Zoom’s strategy for growth and innovation in the competitive field of video communications.
In other recent news, Zoom Video Communications has released its fiscal fourth-quarter results, drawing attention from multiple analyst firms. Stifel has adjusted its outlook on Zoom, lowering the price target from $90.00 to $85.00 while maintaining a Hold rating. The firm noted stable performance in both the Enterprise and Online segments, supported by ongoing product development like the Zoom AI Companion. Meanwhile, Bernstein has held its Market Perform rating with an $89.00 price target, observing a narrow beat in the company’s recent quarterly performance. Bernstein anticipates modest growth, with a forecast of around 4% for the full fiscal year.
Cantor Fitzgerald also reiterated a Neutral rating with an $87.00 target, citing a slight increase in enterprise sales but a shortfall in online revenue. They noted that Zoom’s Contact Center and Workvivo products have contributed to a higher average revenue per user in deals. RBC Capital Markets maintained an Outperform rating and a $95.00 price target, highlighting Zoom’s solid finish to the year with accelerating enterprise growth. Piper Sandler confirmed a Neutral rating with an $89.00 price target, despite a minor miss in sales guidance for the upcoming fiscal year. The firm expressed cautious optimism, noting the potential benefits from new products and partnerships. These developments reflect a varied but generally stable outlook for Zoom amid its strategic initiatives.
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