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On Thursday, Bernstein analysts maintained a Market Perform rating on Zoom Video Communications Inc. (NASDAQ:ZM), with a steady price target of $89.00. According to InvestingPro analysis, Zoom currently trades at $82.27 and appears undervalued based on its Fair Value estimate. The company’s recent first-quarter earnings for fiscal year 2026 showed a modest beat and an increased full-year guidance, supported by impressive gross margins of 75.79%. The $5 million raise in guidance was attributed to an anticipated benefit from a pricing increment for Online Pro customers rather than a direct result of the earnings beat.
Zoom’s earnings surpassed estimates by just under 1%, signaling consistent performance. The company maintains a strong financial position, with InvestingPro data showing an excellent financial health score of 3.16 ("GREAT") and robust balance sheet metrics. However, the company’s outlook remains cautious due to deal delays and macroeconomic uncertainties. As a part of their strategy, Zoom has also continued to reclassify some smaller enterprise clients into their online customer category, marking the second consecutive year for such a move.
Bernstein analysts have adjusted their net revenue retention (NRR) growth projections slightly downward to align with Zoom’s current trajectory. The valuation model employed by Bernstein is a balanced approach, utilizing a 50/50 discounted cash flow (DCF) with no terminal growth and a weighted average cost of capital (WACC) adjusted to 11% from the previous 12%. Additionally, they apply a price to next twelve months (NTM) revenue multiple of 5 times.
Despite the adjustments and the company’s prudent guidance, Bernstein’s $89 price target remains unchanged, reflecting their ongoing Market Perform stance on Zoom stock. The firm’s analysis indicates a level of caution amidst the current business environment while acknowledging Zoom’s ability to deliver a reliable performance.
In other recent news, Zoom Video Communications Inc. reported its first-quarter earnings for 2025, surpassing Wall Street’s expectations with earnings per share (EPS) of $1.43, exceeding the forecast of $1.31. The company posted revenue of $1.17 billion, a 2.9% increase year-over-year, surpassing the consensus estimate of $1,166.3 million. Zoom has raised its full-year revenue guidance to $4.8-$4.81 billion, reflecting a cautious optimism despite macroeconomic challenges affecting the Enterprise segment. The company’s Online segment showed stability with a low churn rate of 2.8%, while the Enterprise segment’s net revenue retention held steady at 98%. Evercore ISI maintained an Outperform rating on Zoom with a $115 price target, citing strong growth in new product offerings like Workvivo and CCaaS. Meanwhile, BofA Securities, Goldman Sachs, and JPMorgan all raised their price targets for Zoom, though they maintained a Neutral rating. These developments underscore Zoom’s robust financial performance and strategic initiatives, including a planned price increase for online subscriptions, which is expected to contribute an additional $10 to $15 million to the company’s guidance.
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